_______________________________________________________ RESPONDENT'S MOTION TO DISMISS GRANTED: July 14, 1995 _______________________________________________________ GSBCA 13280-P HSQ TECHNOLOGY, Protester, v. DEPARTMENT OF THE ARMY, Respondent, and JOHNSON CONTROLS, INC., Intervenor. Donald O. Pratt and Paul H. Sanderford of Canterbury, Stuber, Pratt, Elder & Gooch, Dallas, TX, counsel for Protester. Craig R. Schmauder, Richard C. Frank, and Scott M. McCaleb, U.S. Army Corps of Engineers, Washington, DC; and Larry E. Beall and Gary A. Moore, Office of Counsel, U.S. Army Corps of Engineers, Mobile, AL, counsel for Respondent. James P. Gallatin, Jr., Joseph Brooks, and Peter J. Barrett of Popham Haik Schnobrich & Kaufman, Ltd., Washington, DC, counsel for Intervenor. Before Board Judges PARKER, HYATT, and WILLIAMS. WILLIAMS, Board Judge. Respondent has moved to dismiss the instant protest on the ground that the Board lacks jurisdiction because the underlying procurement falls within the exception to the Federal Information Resources Management Regulation (FIRMR) for upgraded Federal Information Processing (FIP) resources that will be used in or as embedded FIP resources. The procurement is for an upgrade of the Facility Management System (FMS),[foot #] 1 which is also known as a Utility Control System (UCS), to be installed in the Irwin Army Hospital at Ft. Riley, Kansas. The new FMS will provide upgraded monitoring and controlling of the hospital's heating, ventilation, and air conditioning (HVAC) system. Respondent contends that the FIP resources comprising the system will be used as embedded equipment in the hospital, which is not itself automatic data processing equipment (ADPE), and that the FIP resources fall within the upgrade exception to the FIRMR. Respondent's Reply Memorandum at 24. The upgrade exception is a follow-on to the embedded exception and provides that the FIRMR does not apply to replacement or upgrades of embedded FIP resources regardless of cost. 59 Fed. Reg. 66202, 66203 (1994) (to be codified at 41 CFR 1.002-2(g)). The embedded exception exempts embedded FIP resources which are an integral part of a product which itself is not ADPE -- resources which would have to be substantially modified to be used other than as an integral part of the product or which constitute less than 20% of the value of the product or cost $500,000, whichever is lower. Id., 1.002-2(f). Respondent's argument harks back to the 1975 renovation of the hospital. At that time a newly automated HVAC monitoring and control system was installed in the course of renovating the hospital, and it is the upgrade of that automated system which is the subject of this procurement. Respondent contends that the embedded exception would have been met in 1975 because the automated HVAC control system, which cost approximately $300,000, was embedded in the hospital expansion which cost approximately $20,000,000. Thus, respondent contends that because the 1975 acquisition of the automated HVAC would have met the embedded exception at that time, the instant procurement meets the upgrade exception now. The Board convened a hearing on June 6, 1995, to elicit factual testimony explaining the nature of the procurement. At respondent's request, the Board asked the General Services Administration (GSA) for an advisory opinion as to whether the procurement was within the upgrade exception. GSA attended the hearing, and based upon a review of the solicitation and information obtained at the June 6 hearing, GSA concluded that this procurement falls within the upgrade exception. ----------- FOOTNOTE BEGINS --------- [foot #] 1 The solicitation defined the facility management system as follows: "A system made up of one or more digital Control Units which provide climate control, maintenance management, energy management and utility monitoring functions for [a] complete operation of [a] facility. Control units in a system may be linked in a communications network composed of one or more levels of local area networks." Protest File, Exhibit 3 at 13812-5. ----------- FOOTNOTE ENDS ----------- For the reasons stated below, we agree and grant the motion to dismiss. Findings of Fact The Existing Facilities Management System The original Irwin Army Hospital was built in 1955, and contained an HVAC system operated by standard pneumatic controls. Transcript at 11-25, 34. In 1975, the Army undertook an expansion project which essentially doubled the size of the hospital. Id. at 10. As part of the expansion project, a Johnson Controls, Inc. (JCI) system, the JC/80/35, was installed to monitor the HVAC systems throughout the hospital from a remote station. Id. at 9-16. The total cost of the expansion was $20,000,000, and the JC/80/35 system portion cost approximately $300,000. Id. at 11. The Irwin Army Hospital's current system for monitoring HVAC in the hospital includes four workstations, a JC/85/40[foot #] 2 and DSC-8500 panels throughout the hospital that are wired to pneumatic control systems on the heating and air conditioning equipment and valves to monitor other points throughout the hospital. Transcript at 12; see Respondent's Hearing Exhibits A-K. One of the four workstations is in the hospital. Transcript at 13. The existing pneumatic controllers measure the air temperature that is being provided to the system. Id. at 14-15. The chief of the energy branch at Ft. Riley explained how the current system works: With the system that's installed right down, the DSC 8500 would interface with a typical hot deck controller. . . . It would measure the temperature separately because it uses a different type of a sensor, not a pneumatic sensor. It interfaces with the pneumatic controller by being able to adjust the set point by changing it slightly two or three degrees either way. And it would also measure the pneumatic air pressure that went to the control valve, and that pneumatic pressure is converted to an electronic signal which corresponds to the valve position. So the system that [is] currently installed in there will one, measure the air temperature being supplied; [and] . . . [adjust] the set point on the pneumatic control, and also can measure where the position of the valve is. ----------- FOOTNOTE BEGINS --------- [foot #] 2 There were several upgrades to the system since 1975; in 1984 the JC 80/35 was upgraded to a JC 85/40. Transcript at 11-12. The 85/40 also controls the operation of twenty-seven other buildings at Ft. Riley and will continue to do so after the upgrade envisioned by this procurement. Id. at 22. ___ ----------- FOOTNOTE ENDS ----------- Q [C]an you explain to us how the system performs these different functions? A The temperatures are read with an electronic signal. The electrical output is sent to a pressure- to-electric or electric-to-pressure signal to the set point, a pressure-to-electric set point coming back into the DSC 8500. The DSC 8500 takes these electric signals and stores them into its memory and passes them back to the JC 85/40 for other uses and information. So the operator can, from the workstation or at the DSC 8500, make adjustments to change the set point and to read the temperatures and valve position. Transcript at 17-18. The System Being Acquired Under this procurement, the Government is procuring an upgraded utility control system -- new technology which does the same thing as the prior technology, but more efficiently. Transcript at 45. Both the new and the prior systems are automated. Id. at 93. The contractor will be replacing all of the DSC-8500 control panels in the hospital. Id. at 22. Additionally, the pneumatic controls to which the DSC-8500 is connected will be replaced and upgraded with direct digital controls. Id. at 44-45. The hospital will be disconnected from the JC/85/40 system, but the 85/40 will still be used to control operation of twenty-seven other buildings at Ft. Riley. Id. at 22. The chief of the energy branch explained the difference between the system being acquired and the existing system: The new system has more distributed processing and the new workstations will have some programs in them . . . -- the new system does not rely upon a minicomputer like the old 85/40 does. The actual control units in the hospital have memory in them that's called distributed processing. The workstations also contain some of the memory or programs for these workstations -- or the control units, and if a control unit were to lose part of its memory because of a power outage or malfunction, the program would be downloaded from the workstation into the new control unit. . . . . The new workstation will not be connected to the 85/40. Transcript at 27-28. The chief of the energy branch testified that certain components of the system being acquired such as remote control units (RCUs), laser printer, and tape drive could be taken out of that system and used at another location. Transcript at 70-72. He stated that a remote control unit was essentially a small computer which could be unplugged and "used as an RCU [remote control unit] someplace else, [but] [n]ot . . . for anything other than what the application programs and the equipment and things that are tied into it." Id. at 70. With regard to the possible relocation of the communications process, the chief of the energy branch testified: It depends on what the contractor provides, . . . you'd have to go back through the specification to see what the minimum requirements were, and what the contract actually provides, and what it can be used. I'm sure that it could be moved, and still fulfill the functions that were described in the specification[s]. Id. at 72. The chief of the energy branch also testified that if the Army were building a new hospital today it would include an FMS system. Transcript at 111. He explained: Because of the complication, and the inter-connection of all the systems, the interrelationship of these systems, you just don't have the people any more to go in, and individually control, and adjust, . . . without a remote -- or a work station, or a monitoring alarm system. Id. The Solicitation On August 16, 1994, the U.S. Army Corps of Engineers (Corps), Mobile District, issued Request for Proposals (RFP) number DACA01-94-R-0127. The RFP gave the following "Description of Work": The contractor shall furnish, install and interface the existing utility infrastructure at the Facility Management System (FMS) for the Irwin Army Community Hospital at Fort Riley, Kansas. The installed system shall be configured as a distributed processing network. All automatic controls provided under this project shall utilize Direct Digital Control (DDC) to provide the required sequence of utility monitoring and management operations. Protest File, Exhibit 3, 00200 at 2. More specifically, the RFP required that: The Contractor shall furnish the Facility Management System (FMS) described in the accompanying drawings, configured as a distributed processing network of control and monitoring functions as shown in the Input/Output Summaries, specified in the Sequences of Operations or otherwise required to accomplish all operational sequences specified. All automatic controls provided under this specification shall utilize direct digital control (DDC) to provide the required sequence of operation unless shown otherwise. No pneumatic control logic will be allowed except for specifically identified safety or limit devices, although pneumatic actuators may be used for valve or damper applications. . . . The system shall provide operator interaction and dynamic process manipulation, including overall system supervision, coordination, and control. Sensed data shall be obtained by a network of Remote Control Units (RCU), Auxiliary Control Units (ACU), and Unitary Control Units (UCU), collectively referred to as Control Units (CU), using instruments and controls interfaced to mechanical, utility systems and other systems as shown and specified. The Central Operator's station shall communicate with all Control Units (CU) using the Data Transmission Media (DTM) as shown on the accompanying drawings and specified in Paragraph: DATA TRANSMISSION MEDIA (DTM). Id. 13812 at 8-9. The RFP required replacement of the existing system and stated: The existing control system for the Hospital is a Johnson Controls DSC-8500 based installation. This system provides supervisory control and monitoring of a Johnson Controls pneumatic control system. Under this project, the FMS Contractor shall remove the existing control installation and replace it with a new Direct Digital FMS system, as defined by these specifications and the accompanying drawings. Contractor may, but is not required to, incorporate existing control devices in his new installation, as described in these specifications, provided they comply with the requirements for such devices and the Contractor complies with all other project requirements. At the completion of this project, there shall be no "old" or "existing" control system. The new FMS installed by the Contractor shall be THE control system for the Hospital. Protest File, Exhibit 3, 13812 at 14. Discussion The Board is authorized to consider protests involving certain procurements for "automatic data processing equipment" (ADPE) by federal agencies. 40 U.S.C. 759(f)(1) (1988). ADPE is defined as: any equipment or interconnected system or subsystems of equipment that is used in the automatic acquisition, storage, manipulation, management, movement, control, display, switching interchange, transmission, or reception, of data or information- (i) by a Federal agency, or (ii) under a contract with a Federal agency which- (I) requires the use of such equipment, or (II) requires the performance of a service or the furnishing of a product which is performed or produced making significant use of such equipment. 40 U.S.C.A. 759(a)(2)(A) (West Supp. 1995). The Brooks Act further states that the term ADPE includes "related resources as defined by regulations issued by the Administrator for General Services." Id. 759(a)(2)(B)(v). Pursuant to its authority under the Act, GSA has issued the FIRMR, 41 CFR 201-1.000, 201-1.003(a) (1991). The FIRMR applies to "[t]he acquisition, management, and use of FIP resources," a term generally recognized to be coextensive with ADPE, by federal agencies. FIRMR 201-1.002-1(a). If a procurement meets one of the exceptions in the FIRMR, the Board lacks jurisdiction over a protest involving such acquisition. See Best Power Technology Sales Corp. v. Austin, 984 F.2d 1172, 1176-78 (Fed. Cir. 1993). Respondent contends that the Board lacks jurisdiction over the instant protest because the ADPE being acquired here falls within two related exceptions in the FIRMR: (1) the embedded exception and (2) the upgrade exception. The embedded exception provides: The FIRMR does not apply to the acquisition, management, and use of products containing embedded FIP equipment when: (1) The embedded FIP equipment would need to be substantially modified to be used other than as an integral part of the product, or (2) The dollar value of the embedded FIP equipment is less than $500,000 or less than 20 percent of the value of the product, whichever amount is lower. Embedded FIP equipment is FIP equipment that is an integral part of the product, where the principal function of the product is not the automatic acquisition, storage, manipulation, management, movement, control, display, switching, interchange, transmission, or reception of data or information. In an acquisition where multiple products are acquired, the exception applies to each discrete product. FIRMR 201-1.002-2(f) (1994), as amended by FIRMR Amendment 3, 59 Fed. Reg. 66,202-03 (1994). The upgrade exception provides: The FIRMR does not apply to the acquisition, management, and use of FIP resources that will be used in or as embedded FIP resources (equipment, software or supplies) in products excepted from FIRMR coverage under 201-1.002-2(f). This exception includes replacement or upgrades of the embedded FIP resources, regardless of cost. I d . ( t o b e c o d i f i e d a t 4 1 C F R 201-1.002-2(g)).[foot #] 3 At the request of respondent, the Board solicited the opinion of GSA regarding whether the FIP equipment under the instant procurement was subject to the Brooks Act. In a letter of June 13, 1995, GSA advised the Board of its view that the equipment being procured fell within the embedded/upgrade exception. GSA explained the exception as follows: Simply stated, 55 Fed. Reg. 66,202 (1994) excludes upgrades and replacement of embedded FIP resources. . . . [T]he provision . . . merely attempts to articulate the common sense application of the Administrator's determination that embedded FIP resources regardless of when they are acquired, that is, as part of the original acquisition or as a later separate acquisition, are not subject to the Brooks Act. Under the Brooks Act, the function of the equipment and/or its relationship to a larger product guide Brooks Act applicability. GSA explained its rationale for concluding that the instant procurement was within the upgrade exception as follows: ----------- FOOTNOTE BEGINS --------- [foot #] 3 On December 23, 1994, GSA published FIRMR Amendment 3 as a final rule in the Federal Register. In that notice, GSA stated that the effective date of the regulation was January 23, 1995. The regulation did not specify that it was applicable only to solicitations issued after that date, and we deem the regulation applicable to this procurement. Bradley v. __________ School Board of the City of Richmond, 416 U.S. 696, 711-16 ________________________________________ (1974); Central Freight Lines, Inc. v. United States, 669 F.2d ----------- FOOTNOTE BEGINS --------- 1063, 1069 (5th Cir. 1982). ----------- FOOTNOTE ENDS ----------- Based upon the furnished solicitation sections and the information obtained from the June 6, 1995 hearing, the procurement for the replacement of the UCS to be installed at the Irwin Army Hospital falls under the intent, if not the literal words, of the upgrade exception. The UCS, like the HVAC systems and utilities which it will monitor, will be a virtual fixture of the hospital. The UCS function and relationship to the hospital will be the same as it would have been (advances in technology aside) had the UCS been part of the original construction of the hospital. To the extent that the UCS would have qualified as embedded FIP for the original construction, that qualification should apply to subsequent UCS upgrades and replacements. An interpretation or application of the upgrade exception that requires that actual exception of the original product leads to irrational results and was not the intent of the drafters of the upgrade exception. Under such a view, procurements for identical equipment performing identical functions would be distinguished for Brooks Act purposes solely on the basis of the date of the construction or acquisition of the facility. Clearly, a hospital constructed in the 1950s would not have as original equipment ADPE controlled HVAC and utility systems. The modernization of such a facility and its continued upgrading demands the addition of technologically current systems. Since this upgrade process seeks to incorporate within the facility the same modern systems that are included in current hospital construction, there is no basis to exempt the latter from Brooks Act coverage while insisting that later added and upgraded systems to older hospitals are subject to the Brooks Act. Accordingly, to the extent that procured ADPE constitutes embedded FIP resources, such resources are exempt from FIRMR and Brooks Act coverage regardless of the presence or absence of embedded ADPE in the original facility. Letter from Margaret Truntich, Director, Center for Policy and Regulations Management, GSA, to the Board at 2-3 (June 13, 1995). As the starting point for our inquiry as to whether this procurement is subject to the Brooks Act, we look to the nature of the products specified in the solicitation. Best Power Technology Sales Corp. v. Austin, 984 F.2d at 1176. The solicitation here calls for the contractor to furnish and install a replacement facility management system for the Irwin Army Hospital which interfaces the existing utility infrastructure. This system was previously automated and is being upgraded with automatic controls utilizing direct digital control (DDC) logic. Respondent admits that "the FMS as a whole is ADPE," but asserts that this ADPE "will be embedded into the Irwin [Army] Hospital, replacing and upgrading the . . . UCS." Respondent's Motion to Dismiss for Lack of Jurisdiction at 22. Respondent contends that the procurement is within the upgrade exception because the 1975 renovation of the hospital included an automated control and monitoring system for the HVAC which was "embedded" in the hospital itself at that time. Thus, respondent contends that because the 1975 installation of the automated HVAC control system would have met the embedded exception in 1975, the replacement of that system today meets the upgrade exception.[foot #] 4 While at first blush, it may appear unusual to view a building such as a hospital as a "product" within the meaning of the FIRMR, a review of example four in FIRMR Bulletin A-1, Attachment C, indicates that such was the intention of the drafters. Example four provides: A Federal agency initiates a contracting action in which the solicitation requires the contractor to construct a 20-story building. The solicitation does not explicitly require the use of FIP resources during the construction process or delivery of FIP resources for the use of the Federal agency as a part of the completed building. However, it is reasonable to assume that the contractor will use FIP resources during the construction process (e.g., tracking building materials) and that many of the building's features (e.g., elevators and environmental systems) will be controlled by embedded FIP equipment. With respect to the embedded FIP equipment, it is important to note that the exceptions to FIRMR applicability, as set forth at 201-1.002-2, were considered by the agency. Since the dollar value of the embedded FIP equipment is expected to be less than $500,000 and also less than 20 percent of the value of the building, an exception to FIRMR applicability exists for the embedded FIP equipment. FIRMR Bulletin A-1, Attachment C, Example 4. Thus, in this example a newly constructed building was construed to be a "product" in which the very same type system being acquired here, an environmental control and monitoring system, was deemed to be an integral part of the building, and ----------- FOOTNOTE BEGINS --------- [foot #] 4 The embedded exception did not become effective until August 27, 1990, FIRMR Amendment 19, 201-1.103(d)(5), 55 Fed. Reg. 30,702, 30,705 (1990), and the definition of "embedded FIP equipment" was added some months later. See 55 Fed. Reg. 53,386, 53,412 (1990). ___ ----------- FOOTNOTE ENDS ----------- "embedded," and therefore exempt -- as long as it was less than 20% of the value of the building or cost less than $500,000. The express mention of a virtually identical type of a system as embedded in a building in FIRMR example four persuades us that the 1975 installation would have met the embedded exception. Protester relies on Science Applications International Corp. v. National Aeronautics and Space Administration, GSBCA 12600-P, et al., 94-1 BCA 26,553, 1993 BPD 328, to argue that the embedded exception does not apply. Protester's Memorandum in Opposition to Government's Motion to Dismiss at 12. In SAIC, the Board concluded that the Government was purchasing automation for an existing wind tunnel and that the very purpose of the procurement was automation. SAIC, 94-1 BCA at 132,134, 1993 BPD 328, at 9. The Board noted that the SAIC procurement was "for the automation system, not for a product containing an automated system." SAIC, 94-1 BCA, at 132,135, 1993 BPD 328, at 11. The instant procurement is distinguishable. In this case, the Government did acquire a non-ADPE product containing an automated system -- a building expansion into which an automated HVAC monitoring and control system was embedded in 1975. The embedded exception would thus have been met in conjunction with the 1975 expansion of the hospital because the automated HVAC monitoring and control system was being installed in conjunction with a larger construction, which was not ADPE. Further, SAIC did not address the recent upgrade exception, as this exception was not then in effect. But it is the upgrade exception coupled with the embedded exception which exempts this procurement from FIRMR coverage, as the upgrade exception exempts upgrades of embedded FIP resources regardless of cost. FIRMR Amendment 3, 59 Fed. Reg. 66,202 (1994) (to be codified at 41 CFR 201-1.102-2(g)). Once we conclude that the 1975 automated HVAC control system would have met the embedded exception, it follows that the upgrade exception also applies in this instance -- what is being procured is a technologically advanced HVAC monitoring and control system to replace an automated system previously installed as an integral part of a non-ADPE product. In reaching this conclusion, we have taken into account GSA's opinion and explanation of the intent of its implementing regulations. Although the Brooks Act provides that a GSA advisory opinion shall not be binding on the Board, both the Board and the General Accounting Office have given the decisions of GSA's Administrator due weight in determining whether procurements were for ADPE. See 40 U.S.C. 759(f)(5)(A) (West Supp. 1995); e.g. Pindar Donnelly Partnership v. Department of Commerce, GSBCA 12667-P, 94-2 BCA 26,673, at 132,688, 1994 BPD 4, at 25; Bulloch International, Inc., GSBCA 10997-P, 91-2 BCA 23,737, at 118,880-01, 1991 BPD 27, at 9-10; Ebon Research Systems, B-253833.2, et al., 93-2 CPD 270, at 4-5 (Nov. 3, 1993). In concluding that the FIP resources being procured constitute embedded equipment and fall within the upgrade exception, GSA reasoned that the system being acquired is virtually a fixture of the hospital and its relationship to the hospital now is essentially the same as it would have been under the original construction. GSA recognized that although the system for monitoring HVAC which was installed originally in the hospital would not have been automated, the follow-on technology installed in the course of a major hospital renovation is automated and remains an integral part of the hospital. GSA pointed out that there is no basis for distinguishing new systems embedded in current hospital constructions from upgrades of those original systems being converted to new technology. As the agency charged with promulgating the FIRMR, GSA is uniquely experienced to articulate the policy underlying those regulations. GSA has done so here. In its opinion letter to the Board, GSA stated: "An interpretation [of] or application of the upgrade exception that requires the actual exception of the original product leads to irrational results and was not the intent of the drafters of the upgrade exception." Letter to the Board from Margaret Truntich, dated June 13, 1995, at 3. We do not suggest that the upgrade exception should be applied expansively to exempt automated systems in federal facilities from Brooks Act coverage. In order to meet the embedded exception as well as the upgrade exception, the system currently being acquired must have been capable of meeting the embedded exception at the time the embedded product was originally installed, and must be an integral part of and perform an integral function in the product in which it is embedded. The dissent would declare the upgrade regulation to be null and void as being inconsistent with the Brooks Act. While the Brooks Act does give this Board "the authority to review regulations to determine their consistency with applicable statutes," 40 U.S.C. 759(f)(1) (West Supp. 1995), that Act also vests exclusive authority in the Administrator of GSA to provide ADPE "suitable for efficient and effective use by Federal agencies . . . through purchase, lease, transfer [of] equipment of other federal agencies, or otherwise. . .." 40 U.S.C. 759(b)(1) (1988). Pursuant to his authority under the Brooks Act, the Administrator of GSA has promulgated the FIRMR. "The FIRMR system is established to publish and codify uniform policies and procedures pertaining to information resources management activities by Federal agencies." FIRMR 201-3.101 (1990). As the FIRMR further notes: "GSA's Governmentwide role in information management stems from its records management authorities and responsibilities under the National Archives and Records Administration Act of 1984 ([P.L.] 98-497, 44 U.S.C. Ch[apter] 29), and its responsibilities under Section 111 of the Federal Property and Administrative Services Act of 1949, as amended (40 U.S.C. 759), to provide for economic and efficient acquisition of Federal information processing (FIP) resources." FIRMR 201-6.001(5)(b) (1990). The Brooks Act contemplates that the Administrator of GSA will define resources to be included within ADPE. 40 U.S.C.A. 759(a)(2)(B)(v) (West Supp. 1995). The Act confers upon the Administrator broad powers "to coordinate and provide for the economic and efficient . . . lease, and maintenance of [ADPE] by Federal agencies." 40 U.S.C. 759(a)(1) (1988). The legislative history expressly recognizes that "[t]he Administrator of GSA is authorized to exempt individual systems from provisions of this program to avoid compromise of our national security or defense and to assure economy and efficiency." H.R. Rep. No. 802, 89th Cong., 1st Sess. at 6 (1965) (emphasis added); see also 111 Cong. Rec. H4845 (daily ed. Sept. 2, 1965) (statement of Rep. Brooks), which confirms GSA's authority to issue appropriate regulations: The purpose of the bill is to provide a perimeter of organizational responsibility and authority. It is neither necessary nor possible to provide in legislative form detailed statutory instructions to all officials of government involved in automatic data processing management. Traditionally, Congress has approached problems of this kind through general delegations providing that the agencies involved shall issue appropriate regulations which can be altered from time to time as changes in circumstances and new problems or opportunities for more efficient operations arise. Id. at 22823. Here, we cannot say that the decision of the Administrator to promulgate a regulation which continues to apply the embedded exception to upgrades and replacements exceeds the statutory authority vested in him by the Brooks Act. The application of the upgrade exception to a monitoring and control system for a hospital's HVAC system does extend to ADPE, but overall does not compromise the purpose of the Brooks Act of ensuring efficient ADPE management in Government, and coordinating ADPE acquisition among federal agencies. Contrary to the dissent's suggestion, the HVAC controls do not become unembedded simply because they wear out or need to be technologically enhanced. It is well established that an administrative agency's regulations made pursuant to statutory rulemaking authority will be upheld unless they are arbitrary, capricious, or manifestly contrary to statute. E.g., Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 844 (1984). Further, regulations will be upheld if they represent a legitimate, reasonable, and direct adjunct to the power expressly conferred by statute even if not within explicit statutory authority. United States v. Chesapeake and Ohio Railroad Co., 426 U.S. 500 (1976). According to GSA's opinion letter, the upgrade exception was intended to insure consistent treatment of procurements of identical equipment being acquired, on the one hand, today in the first instance as part of a larger non-ADPE product or, on the other hand, being acquired today as a replacement of a similar predecessor product embedded in a non- ADPE product. We would be hard pressed to characterize as irrational GSA's efforts to apply uniform, consistent regulatory treatment to products with identical functions. This said, we realize that the dissent raises a good point -- as a matter of policy, the replacement or upgraded product should perhaps no longer be deemed to be "embedded" because it is now the subject of a stand alone acquisition for ADPE and not an internal component of a larger product. Moreover, certain of the system's computer equipment components (certainly the workstations and printer) can function equally well in any environment. While the question "Should stand alone upgrades/replacements of embedded equipment which are ADPE continue to be deemed embedded?" could be answered either way to promote varying policy considerations, it has been answered by the agency charged with implementing the Brooks Act in a rational manner. That policy may not be one with which we agree, but we cannot say it is inconsistent with the Brooks Act. As the United States Court of Appeals for the District of Columbia Circuit has recognized: "This [tribunal] is not to inquire as to whether the agency's decision is wise as a policy matter; indeed, we are forbidden 'from substituting [our] judgment for that of the agency.' Ethyl Corp. v. EPA, 541 F.2d 1, 34 (D.C. Cir.) (en banc) cert. denied sub nom. E. I. du Pont de Nemours & Co. v. EPA, 426 U.S. 941 (1976)." Association of American Railroads v. Interstate Commerce Commission, 978 F.2d 737, 740 (D.C. Cir. 1992). The excepting of certain circumscribed categories of procurements from GSA oversight is a matter of policy, not a matter of an agency departing from its statutory charter or lacking a rational reason for a regulation. The embedded exception has the rational basis of enabling agencies to procure products with embedded ADPE in a single procurement without segregating out the FIPs resources components of such procurements. The upgrade exception has the rationale of continuing an established regulation in effect since 1990 (the embedded exception) and treating follow-on procurements of embedded ADPE in the same fashion as original procurements. Decision Respondent's motion to dismiss is GRANTED. This protest is DISMISSED FOR LACK OF SUBJECT MATTER JURISDICTION. ____________________________ MARY ELLEN COSTER WILLIAMS Board Judge I concur: ____________________________ CATHERINE B. HYATT Board Judge PARKER, Board Judge, dissenting I respectfully dissent from the opinion of my colleagues, not because their analysis is wrong, but because the regulation which they apply to reach their result, FIRMR 201-39.101-3(b)(7), is irrational and totally inconsistent with the Brooks Automatic Data Processing (ADP) Act. I would strike it down and deny respondent's motion to dismiss for lack of jurisdiction. There is no dispute that the Government is buying ADP equipment which, except for a GSA-created exception, would be subject to the Brooks ADP Act. One of GSA's regulations, FIRMR 201-39.101-3(b)(6), says that ADP equipment which is "embedded" in something else is exempt from the Act. Another regulation, FIRMR 201-39.101-3(b)(7), then goes on to say that if ADP equipment was once embedded in something else, it remains embedded, even when it is no longer embedded. In other words, when the Government buys a computer system, standing alone, it doesn't have to follow the Brooks ADP Act if the computer system is upgrading or replacing one that was once purchased as part of a building. This rule is absurd for several reasons. First, the Brooks ADP Act contains no exception for ADP equipment which is "embedded" in something else. The Act uses the word "significant" to describe the amount of ADP necessary for application of the Act to a Government contract. 40 U.S.C. 759(a)(2)(A) (West Supp. 1995). The concept of significance, of course, makes perfect sense. If the Government is buying a building which happens to contain some ADP equipment, it should follow the rules for buying a building, not for buying ADP equipment. The ADP equipment being purchased is not significant compared to the building. But if the Government is just buying the ADP equipment, shouldn't it follow the rules for buying ADP equipment, rather than the rules for buying a building? Even if we accept as rational GSA's regulatory exception for "embedded" ADP equipment, GSA's "once embedded, always embedded" exception makes no sense. GSA's explanation for this regulatory exception is as follows: the provision . . . merely attempts to articulate the common sense application of the Administrator's determination that embedded FIP resources regardless of when they are acquired, that is, as part of the original acquisition or as a later separate acquisition, are not subject to the Brooks Act. Majority opinion at 8. But the reason the "embedded" equipment was exempted in the first place was not because of the special character of the equipment[foot #] 5, but because the ADP equipment was being purchased as part of a larger, non-ADP procurement for which it would not have made sense to apply ADP procurement rules. Once similar equipment is purchased separately -- the computer system without the building -- the justification for an exception from the Brooks ADP Act disappears. A regulation like FIRMR 201-39.101-3(b)(7), which creates a regulatory exception which is inconsistent with the purpose of the Act pursuant to which it was promulgated, cannot stand. I would strike it down. _____________________ ROBERT W. PARKER Board Judge ----------- FOOTNOTE BEGINS --------- [foot #] 5 To the extent the "embedded" exception is really attempting to create an exception for so-called "special purpose" ADP equipment, it is clearly inconsistent with the intent of the Brooks ADP Act. The Act contains no such exception; in fact, it was amended in 1986 to add a detailed definition of ADP equipment which clarified the application of the Act to "the full range of resources used in the creation and operations of automated systems and subsystems." H.R. Conf. Rep. No. 1005, 99th Cong., 2d Sess. 776 (1986).