THIS OPINION WAS INITIALLY ISSUED UNDER PROTECTIVE ORDER AND IS BEING RELEASED TO THE PUBLIC IN REDACTED FORM ON JANUARY 20, 1995 ___________________________________________________ GRANTED IN PART, DISMISSED IN PART: December 19, 1994 ___________________________________________________ GSBCA 13020-P ELECTRONIC DATA SYSTEMS CORPORATION, Protester, v. DEPARTMENT OF ENERGY, Respondent, and RCG/HAGLER BAILLY, INC., Intervenor. Daniel Parker and William Lieth of Electronic Data Systems Corporation, Herndon, VA, counsel for Protester. Betty R. London and Stephanie Levy, Office of General Counsel, Western Area Power Administration, Department of Energy, Golden, CO, counsel for Respondent. Hugh O'Neill, Ellen F. Randel, Donald P. Young, Judd L. Kessler, and Ronald S. Perlman of Porter, Wright, Morris & Arthur, Washington, DC, counsel for Intervenor. Before Board Judges NEILL, WILLIAMS, and GOODMAN. NEILL, Board Judge. This protest has been filed by Electronic Data Systems Corporation (EDS). It concerns a procurement by the Department of Energy (DOE). EDS contends that DOE has improperly awarded the contract for this procurement to RCG/Hagler Bailly, Inc. (RCG). RCG has intervened in this protest as an intervenor of right. In this protest, as amended, EDS alleges that DOE failed to secure a proper delegation of procurement authority (Count I), made use of an undisclosed evaluation criterion in evaluating awardee's proposed staff and key personnel (Count II), waived a mandatory requirement regarding key personnel (Count III), improperly scored the evaluation of awardee's proposed staff and key personnel (Count IV), performed an improper cost evaluation which led to an incorrect award decision (Count V), and failed to procure in accordance with actual agency requirements (Count VI). For the reasons set out below, we grant Count I of the protest and conclude that the protested award is, therefore, void. Following the Court of Appeals for the Federal Circuit's decision in CACI, Inc. v. Stone, 990 F.2d 1233 (Fed. Cir. 1993), we recognize that the Board itself may not ratify a procurement or contract that a contracting officer lacked authority to issue. Thus, we do not consider the five remaining counts raised by protester regarding the propriety of the award made to RCG. Findings of Fact The Solicitation 1. This procurement was initiated by the DOE's Western Area Power Administration (WAPA). On May 18, 1994, WAPA issued a request for proposals (RFP), number DE-RP65-94WA11753. The RFP envisions a cost-plus-fixed-fee type contract for services that include FIP (Federal Information Processing) and non-FIP resources in connection with a project known as the Resource Planning Guide (RPG). Protest File, Exhibit 10. 2. The RPG is a set of support tools used in the integrated resource planning process designed to help small to mid-size utilities analyze supply-side and demand-side management alternatives. Protest File, Exhibit 10, Appendix A, Statement of Work. The RPG project was initiated in the Fall of 1987. This procurement relates to Part II of the RPG project. RPG Part II constitutes an expansion of the RPG capabilities and a continual updating of reference data which are considered essential to the growing need to support a broad base of users. Under the RFP, a contractor is responsible for providing a wide variety of services and deliverables associated with RPG. This includes RPG data updates and additions, enhancements to RPG analyses with workbooks and software, verification testing, organization of RPG workshops, RPG technical assistance and hotline, final project updating, gathering group and project feedback from RPG users, and managing cost shared RPG projects. Id. at 5-24. 3. The contract contemplated in the RFP is a cost reimbursement contract plus a fixed fee contract. It provides for a base period of two years and three options for one year renewal. Protest File, Exhibit 10 at B-2 to B-3, L-8. 4. proposals were received in response to WAPA's RFP. A competitive range determination reduced the number of vendors in contention for this procurement to . Protest File, Exhibits 25, 28. 5. Clarification requests were sent to offerors in the competitive range in mid-August of 1994. Best and final offers (BAFOs) were requested in early September. Protest File, Exhibits 29-32, 40. WAPA made award to RCG on September 29, 1994, for a total estimated cost of $5,899,557. Id., Exhibit 49. The Delegation of Procurement Authority 6. Prior to the issuance of the RFP, WAPA performed an estimate of what it referred to as "ADP (Automatic Data Processing) costs" associated with the planned contract. The conclusion reached was that the contract would involve an estimated $ in these costs. This figure was based primarily on labor costs estimated by labor classifications and contract line items. These costs were not divided into any specific categories of FIP resources. Protest File, Exhibit 4; Transcript at 180. 7. Based on this initial estimate, the contracting officer concluded that WAPA had the authority to proceed with the procurement under the $2.5 million regulatory delegation of procurement authority (DPA) in the Federal Information Resources Management Regulation (FIRMR). Transcript at 38-45. 8. Subsequent to the filing of this protest, WAPA performed another estimate of the FIP resources to be included in the contract. This time the conclusion was reached that the contract would involve an estimated total of $ in FIP resources. Protest File, Exhibit 75. 9. This second estimate was considerably more detailed. The individual who prepared it was the same person who had prepared the first estimate. At trial, he explained that he prepared this estimate by taking the total direct labor product hours shown in the manpower schedule of the RFP and allocated these hours among the twelve principal elements and sub-elements in the statement of work. Based on his knowledge of the tasks to be done, he then estimated, on an element by element basis, how many of these hours would involve FIP resources and how many would represent non-FIP resources. Once those figures were arrived at for each of the various elements and sub-elements of the statement of work, he multiplied the FIP resource hours for each element by an average labor rate. Protest File, Exhibit 75; Transcript at 188-93. 10. The labor rates originally used were those appearing in the Government's own estimates. However, since the labor rates offered by the awardee were than the Government's estimates, the individual responsible for this estimate made an additional calculation using the rates actually offered by RCG. Based on the Government's estimated rates, he estimated that the contract would include a total of $ for FIP resources. Based on the actual hourly rates in RCG's proposal, he estimated that the contract would include a total of $ for FIP resources. Protest File, Exhibit 75; Transcript at 432-40. 11. Unlike the estimate prepared prior to the issuance of the RFP, this second estimate also divides the cost of the FIP resources into four basic categories: FIP equipment, FIP software, FIP service, and FIP support services. The following totals, based on the Government's estimated rates, are given for the four categories used: FIP Equipment................................$ FIP Software.................................$ FIP Services.................................$ FIP Support Services.........................$ __________ Total........................................$ Protest File, Exhibit 75. 12. As already noted, the dollars shown in the second estimate for estimated cost of FIP resources for the various elements and sub-elements in the statement of work represent the multiplication of FIP resource hours by an average labor rate. All of the amounts included in the FIP software category of the estimate, therefore, reflect labor, not material, costs. Protest File, Exhibit 75; Transcript at 189. The individual responsible for this estimate has confirmed that the RFP does not identify, as such, any piece of existing software which the Government is looking to purchase or acquire in this procurement and which might, therefore, be included in the category of FIP software. Transcript at 201, 206. Instead, labor costs associated with the development, modification, conversion or customizing of RPG software were included in this category of FIP software. Id. at 190-211. 13. The individual responsible for this second estimate has also testified that he relied predominantly upon definitions and examples in the FIRMR Bulletin A-1 to determine the categories of FIP resources into which he should put specific estimated costs. Transcript at 183. He has also testified that, in preparing the second estimate, he believes he erred so far as the calculation of FIP and non-FIP resources is concerned. He now states that in redoing the estimate he would "probably take twenty to thirty percent of all the hours out of these elements and allocate them to non-FIRMR." Id. at 371. 14. By letter dated September 30, 1991, the General Services Administration (GSA) advised DOE that its regulatory delegation for the acquisition of FIP resources was to be increased to $15 million. Effective immediately, GSA granted DOE the authority to contract for the following FIP resources without prior approval of GSA: ADP equipment, software, services, maintenance and support services when the aggregate dollar value of such resources including all optional quantities and periods over the life of the contract does not exceed $15,000,000 for fully competitive actions; and $1,000,000 for a specific make and model specification or for requirements available from only one responsible source. Protest File, Exhibit 74. 15. This increase in DOE's regulatory delegation is expressly contingent upon DOE selectively redelegating increased thresholds of procurement authority to subordinate components to levels which do not exceed the current regulatory delegations of authority specified in the FIRMR. Protest File, Exhibit 74. DOE has, in fact, met this condition and issued regulations prescribing the procedures that must be used before any of the subordinate components of DOE may acquire FIP resources above the $2.5 million threshold in the regulatory delegation specified in the FIRMR. Id., Exhibit 73; Transcript at 34. Since WAPA did not anticipate reaching this threshold for this procurement, these agency procedures were not followed. Transcript at 38. Rather, WAPA relied on the regulatory delegation in FIRMR Section 201-20.305-1 for its authority to conduct this procurement. Id. at 18, 31. Discussion In the first count of this protest, EDS alleges that the contracting officer lacked the requisite procurement authority to make the award. We agree. Respondent freely admits to relying on the regulatory delegation of procurement authority set out in the FIRMR, which at the time of contract award and prior to its subsequent revision read: (a) Agencies may contract for the following FIP resources without prior approval of GSA: (1) FIP equipment, software, services, and support services when the dollar value of any individual type resource including all optional quantities and periods over the life of the contract, does not exceed $2,500,000 . . . . (b) When FIP equipment, software, services and support services (or any combination thereof) are combined and acquired under a single contract action, a specific acquisition delegation shall be required when the dollar value of either the equipment, software, services, or support services exceeds the applicable dollar threshold in Sec. 201-20.305-1(a)(1). 41 CFR 201-20.305-1 (1993) (FIRMR 201-20.305-1). Respondent's reliance on this regulatory delegation was, of course, based upon the initial estimate that this procurement would not involve more than a total of $ for ADP costs. A subsequent estimate, prepared after this protest was filed, only served to reassure the contracting officer that the procurement was still within the limits applicable to the regulatory delegation on which he had relied. Upon review of the record and particularly after hearing the testimony of the individual responsible for the revised estimate, we reject the rationale allegedly used to distinguish FIP resources assigned to the category of FIP software from those assigned to the category of FIP support services. We are told by the author of the revised estimate that he relied predominately upon definitions and examples contained in FIRMR Bulletin A-1 to decide which resources should be placed in the different categories of FIP resources. Use of this bulletin was certainly appropriate. It contains examples of FIP resources and FIRMR applicability when such resources are being acquired by contract. FIRMR Bulletin A-1, however, does not support the inclusion of $ of costs in the category of FIP software. The bulletin defines FIP software as "any software, including firmware, specifically designed to make use of and extend the capabilities of FIP equipment." Protester's Trial Exhibit 1, Attachment A at 4. The individual preparing the revised estimate freely admits that all estimated costs, regardless of the category into which they ultimately were placed, were developed on the basis of the manhours allocated to specific elements and sub-elements in the RFP's statement of work. Furthermore, we are told that the RFP did not envision calling for the purchase or acquisition of any existing software. Given these facts, we fail to see how any significant amount of estimated costs could be included in the category of FIP software. Rather, given the nature of the contract and the multiple services described in the RFP's statement of work, it is only logical to assign these costs, with few exceptions, to the category of FIP support services. FIRMR Bulletin A-1 defines the category of FIP support services as "any commercial non-personal services, including FIP maintenance used in support of FIP equipment, software, or services." Protester's Trial Exhibit 1, Attachment A at 4. The Bulletin also provides the following examples of FIP support services: source data entry; computer output microfilming; software conversion; training; planning for FIP resources; capability and performance validation; studies (e.g., requirements analyses, analyses of alternatives, and conversion studies); facilities management of Government furnished FIP equipment; custom software development; systems analysis and design . . . . Id. at 5. If the amounts allocated to the category of FIP software in respondent's revised estimate are shifted to the category of FIP support services, the $2.5 million limit is readily exceeded. This is true whether one uses the lower Government rates or the higher rates offered by RCG. As to the testimony offered at trial by the estimate's author that he now considers his revised estimates to be overstated by twenty to thirty percent, we reject this statement as unreliable and self-serving. The contracting officer's continued reliance on this revised estimate was, therefore, misplaced. What of the agency's own blanket $15 million regulatory delegation of authority? See Finding 12. Certainly this would have been adequate for WAPA's purposes. The contracting officer, however, has confirmed that no redelegation of this authority was sought. Furthermore, counsel for respondent and RCG have confirmed the absence of a redelegation when they write: But the agency has the [procurement] authority and, if ratification of Western's action were required to avoid a wasteful and costly reprocurement, that ratification would be forthcoming. Respondent's and RCG's Posthearing Brief at 40. We conclude, therefore, that at the time of contract award on September 29, 1994, the contracting officer simply did not have the authority to make an award. Statute vests exclusive authority in the GSA Administrator to provide for the purchase, lease and maintenance of ADP equipment. The Administrator may delegate this authority to agencies when necessary for economy and efficiency. 40 U.S.C. 759(b)(1) (1988). Contracts awarded in the absence of an appropriate delegation must be deemed void. CACI, Inc. v. Stone, 990 F.2d at 1235. Protester has convinced us that this procurement was for a category of FIP resources which, in value, exceeded the threshold applicable for the use of the regulatory delegation in FIRMR Section 201-20.305-1. The regulatory delegation on which the contracting officer relied was, therefore, not available. It is likewise clear that the specific increase in the limits of this regulatory delegation which was granted to DOE in 1991 by GSA was of no benefit to the contracting officer at the time of award. By its terms, this increase in delegated authority requires redelegation within the agency to the appropriate contracting level. No such delegation was sought by the contracting officer. In short, the contract fails for want of the authority to award it. We recognize, of course, that the procurement and contract award in this case fail, not because the GSA Administrator did not make an appropriate delegation of procurement authority to the agency, but rather because this authority was not redelegated to the appropriate procurement level within the agency itself. We further recognize that since award of the contract, an amendment to FIRMR Section 201-20.305-1 has substantially increased the regulatory delegation thresholds for agencies such as DOE. See Amendment to Miscellaneous FIRMR Provisions, 59 Fed. Reg. 61281 (1994) (to be codified at 41 CFR 201-20). Indeed, the contracting officer may well[foot #] 1 at this point in time have the authority which he lacked on the date of award to RCG. Notwithstanding the apparent intention of the Administrator of GSA to delegate the authority necessary to undertake a procurement such as that which is the subject of this protest, we have no intention of permitting this procurement to proceed in its present state. We understand the decision of the Court of Appeals in CACI to rest on the very simple proposition that, in Government procurement law, contracting officers cannot act beyond the limits of their actual authority. CACI, Inc. v. Stone, 990 F.2d at 1236, citing Prestex, Inc. v. United States, 320 F.2d 367, 162 Ct.Cl. 620 (1963). This is what has occurred in this case and why we conclude that the contract award is void. Our appellate authority has previously pointed out that our statutory authority to adjudicate protests and provide appropriate relief does not permit us to ratify a contract that an agency had no authority to create initially. CACI, Inc. v. ----------- FOOTNOTE BEGINS --------- [foot #] 1 We make no express finding on that issue since it has not been briefed by the parties and we do not know at this time how this recent and significant change in FIRMR guidance is actually being implemented within DOE. ----------- FOOTNOTE ENDS ----------- Stone, 990 F.2d at 1236. We have no intention of doing so here. We, therefore, grant Count I of this protest and return the procurement to the contracting officer with instructions to proceed in accordance with applicable statute and regulation. We do not reach the remaining counts of this protest. Whether respondent may ratify this procurement and/or the award it has already made is a decision that DOE will have to make, at least in the first instance. We will not render an advisory opinion on the issue. If the decision is made to ratify, that decision may be protestable. It would, therefore, be premature for us to address it at this time. See Science Applications International Corp. v. National Aeronautics and Space Administration, GSBCA 12600-P, et al., 94-1 BCA 26,553, 1993 BPD 328. In the event DOE elects to ratify both the procurement and the contract award, the remaining counts of this protest could be reinstated through a subsequent protest. A record on which the Board could have relied to decide the remaining counts of this protest has already been developed. This includes an extensive protest file, the transcript of a three day hearing on the merits, and an exchange of posthearing briefs. Any subsequent protest involving these same counts could, therefore, be decided relatively quickly if based upon a stipulated record. Decision Count I of this protest is GRANTED. The remaining counts of the protest are DISMISSED without prejudice. _______________________ EDWIN B. NEILL Board Judge We concur: __________________________ MARY ELLEN COSTER WILLIAMS Board Judge ________________________ ALLAN H. GOODMAN Board Judge