GRANTED: November 22, 1994 GSBCA 13023-P, 13024-P INTEGRATED SYSTEMS GROUP, INC., Protester, v. DEPARTMENT OF THE TREASURY, Respondent. Stephen L. Mills, VP Marketing of Integrated Systems Group, Inc., Vienna, VA, appearing for Protester. William A. Goss and Robert E. Norman, Office of Regional Counsel, Internal Revenue Service, Atlanta, GA, counsel for Respondent. Before Board Judges DANIELS (Chairman), BORWICK, and GOODMAN. DANIELS, Board Judge. Integrated Systems Group, Inc. (ISG), protests that the Internal Revenue Service (IRS), a bureau of the Department of the Treasury, violated mandates of the Federal Information Resources Management Regulation (FIRMR) when it issued two delivery orders for computer workstations and associated equipment. We agree, granting the protests as to both delivery orders. Findings of Fact 1. The IRS's Charlotte Development Center (CDC) needs "programmer workstations and software to provide a generic, standards-based environment, complete with the tools necessary to enable total quality software engineering, design, development, documentation, and maintenance." Protest File, Exhibits A2 at 5- 6 (unnumbered), B3 at 8-9 (unnumbered).1 Specifically, the agency says -- The proposed workstation must have an operating system that is based on System V Release 4, complying with the System V Interface Definition (SVID), and complying with standards such as POSIX (FIPS 151-1, FIPS 151), X/Open XPG3 (common Application Environment Application Programmer Interfaces - OSF CAE), and basic C-2 security as stated in the IRS Standards Based Architecture. It must offer support for a broad range of communications and networking environments (e.g. TCP/IP, X.25, FDDI, etc.) to support the development and testing of software in diverse heterogenous networked environments. Id., Exhibits A2 at 6 (unnumbered), B3 at 9 (unnumbered). 2. On August 8, 1994, the IRS placed in the Commerce Business Daily (CBD) two notices of intent to place orders with Government Technology Services, Inc. (GTSI), against that firm's General Services Administration non-mandatory automatic data processing equipment schedule contract (GSA schedule contract). The notices both mentioned Sun workstations called "SPARCstation 5." The specifics pertaining to the workstations were as follows: First notice Second notice (subject of (subject of GSBCA 13023-P) GSBCA 13024-P) Quantity 10 each 3 each Model number 85 85 Processor speed 85Mhz 85Mhz Disk drive 1.05GB 1.05GB Color monitor 17" 20" The second notice also mentioned several items of computer hardware associated with Sun workstations. Each notice stated, "All responsible sources able to provide the specific make and model equipment are invited to identify their interest and capability to meet the requirement." Each notice further explained that "all responses from responsible sources will be fully considered" and that "[a]s a result of analyzing responses ____________________ 1 The IRS submitted separate protest files for the two cases, which were docketed as GSBCA 13023-P and 13024-P. For simplicity's sake, when citing to a protest file exhibit, we refer to a single file, with the GSBCA 13023-P exhibits designated by an "A" before the exhibit number, and the GSBCA 13024-P exhibits designated by a "B" before the exhibit number. to this synopsis of intent, the contracting officer may determine that a solicitation will be issued." Protest File, Exhibits A4, B4. 3. Two weeks after these notices were published, the IRS prepared Justifications for Other than Full and Open Competition, explaining why the specific makes and models described in the notices were required. Each Justification states that the agency "has reviewed the market for workstations that meet the requirements stated [in Finding 1] and has determined that the SUN SPARCstation 5 Model 85 is the best choice." The Justifications also say that the CDC "already has an established base of SUN Workstations running the Solaris 2.3 Operating System"; that the staff is familiar with this hardware and operating system; and that the agency would benefit from using software products which are available for the Solaris operating system. The Justifications explain further that the IRS knows that three manufacturers in addition to Sun make equipment that meets the agency's needs, but that the prices charged by those firms are "significantly higher" than Sun's. Protest File, Exhibits A3 at 6-7 (unnumbered), B3 at 9-10 (unnumbered). 4. ISG timely responded to both CBD notices by quoting prices for Tatung equipment which, according to ISG, meets all salient characteristics stated in the notices. Protest File, Exhibits A10-11, B10-11. Other vendors responded, too. As to the first notice, two companies quoted open-market prices for Sun equipment, and two quoted open-market prices for Tatung products; the lowest price was nearly $14,000 less than prices for the items on GTSI's GSA schedule contract. Id., Exhibit A5. As to the second notice, four companies quoted open-market prices for Sun equipment, and one for Sun and Tatung products; the lowest price was nearly $2,000 less than the GTSI schedule prices. Id., Exhibit B5. 5. After the IRS received these quotations, the members of the agency's technical evaluation team changed their minds as to precisely what items, and how many of each, the agency needed. Protest File, Exhibit B9 at 2. The changes were regarding the SPARCstation 5 equipment, as follows: Stated in CBD notice As changed First notice: quantity 10 each 14 each model number 85 70 processor speed 85Mhz 70 Mhz disk drive 1.05GB 535MB Second notice: quantity 3 each 5 each model number 85 70 system memory 32MB RAM 16MB RAM disk drive 1.05GB 535MB color monitor 20" 17" Id., Exhibits A2, B2. These changes were significant; they reduced the GTSI unit price of a SPARCstation 5 as configured per the first notice by 32 percent, and as configured per the second notice by 42 percent. Id., Exhibits A5, B5. 6. The IRS then asked the firms which had responded to the CBD notices by providing price quotations for Sun equipment to provide quotations for equipment which met the revised specifications. Because ISG had provided quotations for Tatung equipment, it was not asked to give quotes on the revised specifications. Protest File, Exhibit B9. Only one firm responded. Id., Exhibits A5, B5. 7. The contracting officer added $14,500 to each of the prices quoted by the responding vendor; this amount apparently represents what the contracting officer believes to be the administrative cost of conducting a competitive procurement. Because each of these prices, with the $14,500 handicap, was higher than GTSI's schedule prices, she determined that orders should be placed against the GTSI GSA schedule contract. Protest File, Exhibit B9. The orders were placed on September 13. The one covering items resembling those in the first CBD notice is in the amount of $70,644; the other is in the amount of $62,174. Id., Exhibits A6, B6. The items ordered from GTSI were different from the items specified as agency requirements in Finding 5. As to the order resembling the one described in the first notice, the agency asked for workstations with system memory of 16MB, rather than 32MB, of random access memory. As to each order, the agency asked for a TGX graphics card which was not previously described. Id. 8. The IRS admits that the contracting officer did not notify any of the firms which had provided price quotations of the issuance of the delivery orders to GTSI. Respondent's Post- Submission Brief at 4. ISG states that it learned of the issuance in a conversation with an agency employee on October 12. Amended Complaint, Facts 3. 9. The protests were filed on October 13. By that time, the equipment covered by the orders had been delivered to the CDC, and some of it had been installed, but none of it had been accepted. After receiving the protests, the agency issued a stop work order which precludes acceptance and agreed to keep the order in place as long as the protests remain before the Board. Board's Memorandum of Conference of Oct. 18, 1994, at 2; Respondent's Post-Submission Brief at 4-5. 10. While the protests were pending, IRS computer specialists examined the product literature for the Tatung items specified by ISG and determined that those items do not meet the agency's technical specifications for the workstations it needs. The specifications against which the specialists evaluated the Tatung products had not been mentioned as agency requirements in either CBD notice, or even in either Justification for Other than Full and Open Competition. Protest File, Exhibits A8, B8. Discussion The FIRMR prescribes special, simplified procedures for acquiring automatic data processing equipment using GSA schedule contracts, and for publicizing those actions. 41 CFR subpt. 201-39.5, 201-39.803 (1993) (FIRMR 201-39.5, 201-39.803). These procedures exist to ensure that agencies place orders under the contracts only when doing so "would result in a lower overall cost than other contracting methods, such as issuing a solicitation." FIRMR 201-39.803-1(b). Thus, the procedures make use of schedule contracts consonant with the statutory mandate that the Government do business with the firms whose bids and offers are most advantageous to the United States. See 41 U.S.C. 253b(c), (d)(4) (1988); Integrated Systems Group, Inc., GSBCA 11494-P, 92-1 BCA 24,621, at 122,809, 1991 BPD 335, at 5. The basic structure of these procedures is as follows. When an agency intends to place an order against a GSA schedule contract, it must first justify any restrictive requirement pertaining to that order. FIRMR 201-39.803-3(a)(1). Then, if the total value of the order is greater than $50,000, the agency is to publicize its intent by synopsizing the nature of the order in the Commerce Business Daily. FIRMR 201-39.501-1, -2(a)(1). The synopsis must contain sufficient information that vendors reading it are able to respond in enough detail as to permit the agency to determine, from the responses, how the agency can meet its requirements at lowest cost -- by placing the originally- intended order, placing an order against another firm's schedule contract, or conducting a competitive procurement. FIRMR 201-39.501-3(c), 201-39.803-3(b). If an order is placed against a schedule contract, the agency must "promptly provide written notification of award to the synopsized schedule vendor and to all parties responding in writing to the CBD notice." FIRMR 201-39.803-3(c). The IRS followed none of these rules in the actions challenged through ISG's protests. The agency attempted to justify a restrictive requirement -- that only Sun workstations would satisfy its needs -- after it published the CBD notices, rather than before. The justifications it wrote pertained to different workstations from the ones it eventually bought. The agency never synopsized the orders it placed; the workstations ultimately ordered were significantly less powerful and less expensive than the ones it announced an intention to buy. Thus, neither ISG nor any other vendor had sufficient information to provide a response as to what items it might provide, and at what prices, if it were allowed to satisfy the revised requirements through a competitively-awarded contract. Federal Systems Group, Inc., GSBCA 9924-P, et al., 89-2 BCA 21,758, at 109,500, 1989 BPD 105, at 8. Consequently, the IRS had no data as to alternatives to placing the orders it issued, and therefore no basis for concluding that GTSI's schedule contract offered the lowest cost alternatives.2 Finally, the agency did not give ISG, which did respond to the CBD notices, written notification that the orders had been made. On the basis of the record in these protests, we have three additional concerns about the IRS's actions. First, the Justifications for Other than Full and Open Competition, on their face, establish that restricting competition to the specific makes and models of equipment stated is inappropriate. The fact that agency personnel know and like Sun products is not a valid reason for restricting competition. Because the agency knows that several manufacturers make products which will meet its needs, permitting only Sun products to be supplied is unnecessarily restrictive and therefore contrary to law. 41 U.S.C. 253a (1988). Additionally, once the IRS learned that vendors believed that Tatung products could also meet stated agency needs, the IRS should have reviewed the Justifications to see whether they were in error. Second, the IRS's determination that ISG's Tatung products are inadequate was improper because it was based on qualifications which were never stated in the CBD notices. If the specifications against which the Tatung products were judged ____________________ 2 The IRS appears to believe that the FIRMR permits an agency to send successive rounds of synopses to limited numbers of vendors, subsequent to redeterminations of agency needs, and then to decide on a course of action based on responses to the latest round. This is not so. Even if it were, however, we still could not find that the IRS had information on which to base a conclusion that placing its orders was the lowest cost alternative available. The agency ordered goods different from those denominated in the list it sent to the limited group of vendors; thus, it never sought or received any price data from any firm other than the selected schedule contractor as to the precise goods it finally received. represent actual needs, they should have been stated in a synopsis; a vendor reading the notice would then have known that his response would have to state an ability to supply a product with requisite components. Federal Systems Group, 89-2 BCA at 109,500, 1989 BPD 105, at 8-9. The IRS had no basis for concluding that ISG (or another vendor), upon learning of the agency's complete requirements, could not configure a Tatung workstation to meet those requirements. The specifications may also have an impact on whether restricting competition to a particular manufacturer's goods is permissible. Third, the IRS has provided absolutely no support for the proposition that the administrative cost of conducting the procurement necessary to acquire each group of items in question is $14,500. The amount of administrative costs is dependent on the complexity of a procurement, and ascribing such a high figure to what should be a simple acquisition (probably involving sealed bidding) seems arbitrary in the absence of any evidence that it is reasonable. Computer Sales International, Inc., GSBCA 10443-P, 90-2 BCA 22,736, at 114,137, 1990 BPD 49, at 8; ISYX, GSBCA 9407-P, 88-2 BCA 20,781, at 105,000, 1988 BPD 78, at 8. Further, as ISG suggests, because the items covered by the two notices are so similar, there appears to be no reason why the agency could not conduct a single procurement for all the goods in question; that would reduce by half the administrative costs of the acquisition. On the basis of what the agency learned about the relationship between open-market prices and GTSI schedule contract prices for the items in question, it appears that a competitive procurement could well permit the IRS to acquire needed goods at less cost, even including administrative expenses. Decision The protests are GRANTED. The IRS shall rescind the orders it placed against GTSI's GSA schedule contract. Because the goods in question have not been accepted, the orders may not be presumed valid. 40 U.S.C. 759(f)(6)(B) (1988). The agency shall reconsider its justification for restricting competition to vendors who offer Sun workstations, and determine the appropriate specifications for the workstations it needs. The agency shall then decide whether to conduct a competitive procurement to satisfy its requirement, or to follow the mandates of the FIRMR as to placement of an order against a GSA schedule contract. _________________________ STEPHEN M. DANIELS Board Judge We concur: _________________________ _________________________ ANTHONY S. BORWICK ALLAN H. GOODMAN Board Judge Board Judge