MOTIONS FOR FULL BOARD CONSIDERATION DENIED: September 29, 1995 GSBCA 13323-P-R, 13333-P-R SPRINT COMMUNICATIONS COMPANY, L.P., and AT&T COMMUNICATIONS, INC., Protesters/Intervenors, v. GENERAL SERVICES ADMINISTRATION, Respondent. David S. Cohen, William F. Savarino, Carrie B. Mann, and G. Brent Connor of Cohen & White, Washington, DC; and George Affe and Anthony Cogswell of Sprint Communications Company, L.P., Herndon, VA, counsel for Protester/Intervenor Sprint Communications Company, L.P. Thomas C. Papson and James P. Lamoureux of McKenna & Cuneo, L.L.P., Washington, DC; and Nathaniel Friends, G. Ridgley Loux, and Steven W. DeGeorge of AT&T, Silver Spring, MD, counsel for Protester/Intervenor AT&T Communications, Inc. George N. Barclay, Michael J. Ettner, Pamela J. Reiner, Marie N. Adamson, and Jody B. Burton, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before the Full Board. ORDER The motions filed by protesters/intervenors Sprint Communications Company, L.P., and AT&T Communications, Inc., for full Board consideration of the panel's decision in Sprint Communications Co. v. General Services Administration, GSBCA 13323-P, et al., 1995 BPD 144 (July 20, 1995), reconsideration denied, 1995 BPD 170 (Aug. 22, 1995), are DENIED. DANIELS (Chairman), NEILL, and VERGILIO, Board Judges, dissenting. I. We would grant the motions for full Board consideration of the Board's jurisdiction over these protests. The matter raised is of considerable importance in two regards. First, the type of contracting involved here -- the use of parallel contracts as a vehicle for continuing competition among a limited number of contractors -- is a procurement technique which is being used with increasing frequency. Second, the immensity of the program -- entailing an outlay of as much as $25 billion over ten years -- commands attention. Full Board consideration is also merited to review a panel decision which we see as departing, without convincing rationale, from a soundly-based practice of the General Accounting Office. We respectfully disagree with our colleagues as to jurisdiction. In our view, the challenged Government actions are protestable in this forum. The panel to which the cases were referred erred in dismissing them for lack of jurisdiction. The Board should have proceeded to consider the remaining dispositive motions and then, if appropriate, to decide the cases on their merits. II. In 1988, the General Services Administration (GSA) awarded contracts under its FTS2000 program to the two protesters, AT&T Communications, Inc. (AT&T), and Sprint Communications Company, L.P. (Sprint). Each contract entitled its holder to provide certain intercity telecommunications services to the Federal Government over a ten-year period. AT&T's contract was for Network A, to which were assigned agencies whose requirements were intended to equal sixty percent of the projected program revenues; Sprint's contract was for Network B, to which were assigned agencies whose requirements were intended to equal the remaining forty percent. "As a means of ensuring continued improvements in FTS2000 services and prices," the contracts contained provisions designed to stimulate competition between the two companies. The initial 60/40 allocation was established only for the first four contract years. During the fourth year, and again in the seventh year, each company was to submit a "proposal for price redetermination." The agency would then, in accordance with pre- announced criteria, evaluate the quality of service and prices associated with each proposal. At the end of each of these years, GSA, based on its evaluation, could reallocate from one network to the other enough requirements to generate forty percent of the revenues associated with the network losing requirements. See AT&T Communications, Inc. v. Wiltel, Inc., 1 F.3d 1201, 1204 (Fed. Cir. 1993). The contracts guaranteed to AT&T and Sprint, then, the right to provide, between them, all the service the Government would order under the FTS2000 program for a ten-year period. From the perspective of each of the two companies, however, the contracts promised something very different: an allocation of work designed to achieve a fixed percentage of revenues for four years, and after that, at each of two points in time, a competition through which a significant portion of FTS2000 services could be reallocated. The reallocation could have enormous impact on contract work and revenues. AT&T, for example, was to receive an anticipated sixty percent of service revenues during years 1-4; if it won the year 4 competition, its allocation for years 5-7 would rise to 76 percent, and if it won the year 7 competition as well, it would be assigned, for years 8-10, agencies whose requirements would be intended to equal 85.6 percent of projected program revenues. Conversely, if AT&T lost both competitions, its allocation for years 5-7 would fall to 36 percent, and for years 8-10 would be only 21.6 percent. Sprint similarly was guaranteed a projected forty percent for years 1-4, but could receive 64, 40, or 24 percent for years 5-7 and from 78.4 to 14.4 percent for years 8-10. The year 4 competition resulted in no change in allocation of projected program revenues. In year 7, GSA has solicited proposals for price redetermination, including pricing, technical, and business proposal information; announced an intention to evaluate these proposals on the basis of technical and cost factors, and to select as the "winning scenario" the "more advantageous" of the two; conducted negotiations with the two companies; and asked for best and final offers. The "Year 7 Price Redetermination and Service Reallocation Document" which was sent to the companies is organized into the standard sections established by the Federal Acquisition Regulation (FAR) for competitive solicitations, and it contains or references many standard clauses which are required by the FAR to be included in such solicitations. Each firm has protested that the terms of this document are violative of statute and regulation, in that they make the competition unfair. III. According to the Brooks Automatic Data Processing Act, 40 U.S.C.A. 759(f)(1) (West Supp. 1995) -- Upon request of an interested party in connection with any procurement that is subject to this section . . . , the [Board] shall review, as provided in this subsection, any decision by a contracting officer that is alleged to violate a statute, a regulation, or the conditions of a delegation of procurement authority. In these protests, there is no question that the protesters are interested parties; that the matter involved is subject to the Brooks Act; and that the protests allege that a contracting officer's actions have violated a statute, regulation, or delegation of procurement authority. The question before the Board is whether the issues raised by protesters arose "in connection with [a] procurement." The Brooks Act itself does not define the term "procurement." The Federal Property and Administrative Services Act, of which the Brooks Act is a part, does not include a definition, either. Nor does the FAR, 48 CFR, say what a "procurement" is. The Brooks Act contains other provisions which limit the sorts of contracting actions which may be reviewed by this Board, however. Beyond its first sentence, 40 U.S.C. 759(f) uses the term "protest" to describe the nature of the request which may trigger a review. A "protest" is "a written objection by an interested party" to any of four varieties of action -- (i) A solicitation or other request by a Federal agency for offers for a contract for the procurement of property or services. (ii) The cancellation of such a solicitation or other request. (iii) An award or proposed award of such a contract. (iv) A termination or cancellation of an award of such a contract, if [certain circumstances are present]. 40 U.S.C.A. 759(f)(9)(A) (West Supp. 1995). The complaints filed by AT&T and Sprint are within our jurisdiction only if their subject matter falls into one of the specified categories. In our judgment, the subject of the protests falls squarely within the first category -- it is a solicitation by a Federal agency for offers for a contract for the procurement of services. According to the FAR, a "solicitation" is "a request for proposals (RFP) or a request for quotations (RFQ) in negotiation." 48 CFR 52.215-5 (1994). GSA has issued such a document to AT&T and Sprint. The FAR defines a "contract" as -- a mutually binding legal relationship obligating the seller to furnish the supplies or services (including construction) and the buyer to pay for them. It includes all types of commitments that obligate the Government to an expenditure of appropriated funds and that, except as otherwise authorized, are in writing. In addition to bilateral instruments, contracts include (but are not limited to) [numerous kinds of instruments, including] bilateral contract modifications. Id. 2.101. The result of the competition between the two firms will be such a relationship, modifying existing contracts to cover contract years 8-10. At the time of award, the contracts secured to each of AT&T and Sprint three rights: an assignment of work designed to achieve a fixed percentage of program revenues during contract years 1-4; a guarantee of work designed to achieve lesser percentages of revenues during years 5-10;[foot #] 1 and the opportunity to participate in limited competitions which might lead to allocations of revenues above those guaranteed minimums for years 5-7 and 8-10. The competitions are to be limited in two ways -- only these two firms may participate in them, and the winner may take only forty percent of the loser's share of prospective revenues at each of two moments in time. The General Accounting Office (GAO), like this Board, has statutory authority to consider procurement protests. 31 U.S.C. 3552, 3553(a) (1988). A "protest," for the purpose of GAO proceedings, has the same meaning as that term has for Board proceedings. 31 U.S.C.A. 3551(1) (West Supp. 1995). On three occasions, GAO has considered whether it has jurisdiction to consider protests involving limited competitions for the right to perform work that was included in the same contract, with the proviso that the Government had the choice of not ordering it. Each time, GAO held that it had jurisdiction. Honeywell, Inc., B-244555, 91-2 CPD 390 (Oct. 29, 1991); Mine Safety Appliances Co., 69 Comp. Gen. 562 (1990), 90-2 CPD 11; Westinghouse Electric Corp., 57 Comp. Gen. 329 (1978), 78-1 CPD 181.[foot #] 2 The teaching of these three decisions is that jurisdiction over a protest exists (given other preconditions) wherever the ----------- FOOTNOTE BEGINS --------- [foot #] 1 The percentages are as follows: Contractor Years 1-4 Years 5-7 Years 8-10 __________ _________ _________ __________ AT&T 60 36 21.6 Sprint 40 24 14.4 Because the year 4 competition resulted in no change in allocation of projected revenues during years 5-7, the percentages shown for years 5-7 are now the minimums for years 8- 10. [foot #] 2 We recognize that when the first of these three decisions was issued, GAO had no statutory authority to consider procurement protests (and thus no statutory definition of "protest" to assess its jurisdiction against), and that when the second and third decisions were issued, the definition of "protest" for both GAO and the Board was slightly different from what it is now. None of this has any impact on our analysis. ----------- FOOTNOTE ENDS ----------- subject of the complaint is a competition between bidders or offerors for the award of a Government contract -- including the modification of an existing contract to incorporate additional work. GAO's understanding is that the substance, rather than the form, of the matter is what counts. We share that interpretation of the law. The Board panel distinguishes these decisions on the ground that they involved the exercise of options, and thus the award of work not guaranteed by existing contracts, rather than the reallocation of work all of which was encompassed by such contracts. We see this as a meaningless distinction. From the perspective of each company involved in the instant protests, the situation here is effectively identical to the one extant in the option cases -- the agency may, but need not, order under an existing contract more work than the guaranteed minimum for the next three years. The only real difference between the GAO cases and this one is that here, the work which each company sees as covered by an "option" must be given by GSA to the other company if the "option" is not exercised. This has no effect on the fundamental fact that the agency is conducting a formal competition between the two firms.[foot #] 3 Neither FTS2000 contract contains a limitation which exempts the year 4 or year 7 competition from what seems to us, reading the statute and relevant regulatory definitions, a clear inclusion within the Board's protest jurisdiction of complaints about the contests. Congress certainly knows how to exempt from protest authority procurement actions which would otherwise be protestable. In the Federal Acquisition Streamlining Act of 1994, for example, it provided: A protest is not authorized in connection with the issuance or proposed issuance of a task or delivery order except for a protest on the ground that the order increases the scope, period, or maximum value of the contract under which the order is issued. Pub. L. No. 103-355, 108 Stat. 3243, 3253, 3264 (1994) (creating 10 U.S.C. 2304c(d), 41 U.S.C. 253j(d)). No such law precludes a protest of a solicitation issued by GSA, with the result of awarding allocations of FTS2000 work, to the two FTS2000 contractors. Thus we conclude that Congress intended that the Board take jurisdiction over the complaints. ----------- FOOTNOTE BEGINS --------- [foot #] 3 Furthermore, even if we were not sure that this is so, the Board must keep in mind Congress' intention that our "jurisdiction and function shall be broadly construed so as to effectuate the purposes underlying the original grant of protest jurisdiction to it." H.R. Conf. Rep. No. 1005, 99th Cong., 2d Sess. 775 (1986); SMS Data Products Group, Inc. v. __________________________________ United States, 853 F.2d 1547, 1555 n.* (Fed. Cir. 1988). _____________ ----------- FOOTNOTE ENDS ----------- _________________________ STEPHEN M. DANIELS Board Judge _________________________ _________________________ EDWIN B. NEILL JOSEPH A. VERGILIO Board Judge Board Judge VERGILIO, Board Judge, dissenting. I join the other dissenting judges in seeking to resolve this matter through the full Board and in concluding that the Board has jurisdiction over the two protests. I write separately to explain my rationale which I fear becomes obscured in the analysis of the other dissenters. Further, an additional reason why this jurisdictional issue merits the consideration of the full Board is that all these parties could be back before the Board after the agency makes its selection determination -- the jurisdictional issue is far from moot. I part company from the original panel in my understanding of the procurement at issue and the application of the Board's jurisdictional statute. The FTS2000 solicitation expresses a requirement for an on-going competition to the extent that after the award of two contracts, discrete competitions are to occur at years four and seven. The FTS2000 contracts ( H.14) envision limiting these future competitions to the two contractors which are obligated to compete under contractually specified and anticipated terms and conditions. The contracts dictate that the agency will provide AT&T and Sprint "with the applicable evaluation criteria at the time that the Government requests proposals for price redetermination." No actual or potential offeror challenged such a competition limited to particular sources as violative of the statutory competition requirements. However the agency now characterizes its actions and designates the documents it provides to AT&T and Sprint does not alter what is occurring. As required by the provisions of the FTS2000 contracts, the agency is engaged in a competition to satisfy on-going requirements. The agency is specifying requirements for which it is seeking prices, and has established evaluation and selection criteria. AT&T and Sprint are actual offerors challenging the terms and conditions of the competition. The Board has jurisdiction over these protests. The contract administration aspects of what is occurring do not divest this Board of jurisdiction over the contract formation issues. Neither AT&T nor Sprint requests the Board to review the agency actions in the context of a contract dispute and to fashion relief accordingly. Rather, each has focused its protest on the contract formation aspects of the agency's actions -- each desires to ensure that the agency conducts the competition in accordance with statute and regulation. The focus of the protests is the competition expressly recognized in the FTS2000 solicitation and contracts. The statute established the Board to consider such allegations of contracting officer error and to fashion timely, effective relief, if appropriate. The original panel was unduly influenced by, what I view to be, inapplicable Board precedent, AT&T Communications, Inc., GSBCA 11138-P, 91-2 BCA 23,852, 1991 BPD 59. This situation with competition limited to the two contractors is distinguishable from either AT&T or Sprint voluntarily or unilaterally reducing its pricing during the course of its contract; the contracts expressly anticipate such price reductions as occurring without further competition. A true competition is now occurring at year seven of the FTS2000 contracts. Unlike a majority of the Board, I conclude that AT&T or Sprint may protest the terms and conditions of this discrete competition or the agency's ultimate selection of the awardee. _________________________ JOSEPH A. VERGILIO Board Judge GOODMAN, Board Judge, dissenting. I find persuasive the rationale of Honeywell, Inc., B-244555, 91-2 CPD 390 (Oct. 29, 1991); Mine Safety Appliances Co., 69 Comp. Gen. 562 (1990), 90-2 CPD 11; and Westinghouse Electric Corp., 57 Comp. Gen. 329 (1978), 78-1 CPD 181. As in those cases, the action which is protested here was a competition limited to awardees of contracts after the initial period of contract performance to determine which of the original awardees would perform work for which they both were required and entitled to compete. In the instant procurement, respondent used what it called "reallocation," to determine the percentage of the remaining work each of the original awardees would perform, instead of using the term "competition" or availing itself of the contractual mechanism of an option which would award the remaining work to one awardee as was done in the procurements which were the subject of the aforementioned Comptroller General decisions. This factual difference is not relevant to the resolution of the jurisdictional issue. Rather, I view the use of limited competition as the determinative factor. I believe this Board has jurisdiction to decide the instant protests. _________________________ ALLAN H. GOODMAN Board Judge