______________________________________________ DENIED: October 30, 1995 _______________________________________________ GSBCA 13356-P, 13390-P WILLIAMS ELECTRIC COMPANY, INC., Protester, and HSQ TECHNOLOGY, Protester/Intervenor, v. DEPARTMENT OF THE ARMY, Respondent, and SIEBE ENVIRONMENTAL CONTROLS, Intervenor. Raymond Fioravanti and Michael K. Love of Epstein Becker & Green, Washington, DC; and Alan Dickson of Epstein Becker & Green, Los Angeles, CA, counsel for Protester Williams Electric Company, Inc. Donald O. Pratt and Paul H. Sanderford of Canterbury, Stuber, Pratt, Elder & Gooch, Dallas, TX, counsel for Protester/Intervenor HSQ Technology. Craig R. Schmauder and Richard C. Frank, Office of the Chief Counsel, U.S. Army Corps of Engineers, Washington, DC; and Steven W. Feldman and Charles T. Frew, Army Engineer Division, Huntsville, AL, counsel for Respondent. Timothy F. Brown and Shelly L. Ewald of Watt, Tieder & Hoffar, McLean, VA, counsel for Intervenor Siebe Environmental Controls. Before Board Judges DANIELS (Chairman), PARKER, and VERGILIO. PARKER, Board Judge. Protesters Williams Electric Company, Inc. and HSQ Technology allege that the United States Army Corps of Engineers violated statute and regulation by issuing certain delivery orders to intervenor Siebe Environmental Controls. The protesters' main contention is that the work to be performed under the protested delivery orders -- replacement of fire alarm and utility control systems -- is outside the scope of Siebe's existing contract with the Corps and, thus, should have been procured competitively. Williams and HSQ would like to compete for the opportunity to perform that work. For the reasons discussed below, we deny the protests. The work to be performed pursuant to the protested delivery orders is within the scope of Siebe's existing contract. Protesters' various other complaints about the purchase orders are similarly without merit. Findings of Fact The protesters, Williams and HSQ, are companies which, among other things, install fire alarm systems and energy monitoring and control systems under contracts with the Federal Government. Transcript at 296-300, 347-49. The Terms of Siebe's Contract The protested task orders were, or will soon be, issued by the Corps of Engineers to intervenor Siebe Environmental Controls under Siebe's existing contract to "remediate" medical facilities at Army bases throughout the United States. Siebe's contract, awarded on September 13, 1994, is for a term of one year, with four optional years. Section C of the contract describes the "scope of work" as follows: OBJECTIVE. This contract is intended to provide quick response to remediation situations relating, but not limited to, the mechanical, electrical, instrumentation, security and safety areas of Government medical and other facilities in a cost effective manner. This response shall be taken to remediate facilities in a cost effective manner. Government medical facility remediation shall conform to the requirements of the Joint Commission of Accrediation [sic] of Health Care Organization (JCAHO) Life Safety Management Standards. Mechanical involvement will include heating, ventilation, and air conditioning (HVAC) systems and components, transient tubes, incinerators, fuel lines, elevators, and sterilization systems, as well as plumbing systems involving water, solid, and hazardous waste control, and medical gas systems. Projects in the electrical area will involve power and services supplies, distribution, and utilization systems (including lighting), power generation and uninterrupted power supplies (UPS). Instrumentation projects will involve energy monitoring and control systems and fire alarm systems. Nurse call/communications systems will involve medical nurse call and related communications systems. Security projects will deal with medical facility security systems. Safety remediation will involve review and upgrade of life safety, inflamatory [sic] gases, medical safety and hygiene and fire protection systems. Asbestos removal/disposal will be required during equipment/systems remediation. Architectural, structural, and civil efforts may also be required. Ancillary work necessary to support the remediation project or to restore the work area to the condition prior to the remediation project shall be included in this contract. It is anticipated that approximately 20 percent of this contract may be for non-medical facility remediation. This objective shall be achieved through the implementation of delivery orders issued under the terms of this contract for all of the herein described tasks or additional tasks described in specific task orders. 2.0 DESCRIPTION. 2.1 General. 2.1.1 Often Government medical installations and facilities have problems that cannot be dealt with efficiently by issuance of individual acquisitions by the U.S. Army Corps of Engineers and that are too involved for the local facilities work force. The solution for these types of problems provide [sic] the basis for this contract. Protest File, Exhibit 8 at C-1 (emphasis added). Siebe is responsible for: all site surveys, feasibility studies, calculations, work plans, remediation actions, equipment startups and testing and/or repair, and training required to implement the MFRPs [medical facility remedial projects] awarded, including, but not limited to labor, equipment, materials, software, applicable engineering documentation, and other necessary services and/or products required to remediate, implement, test the awarded MFRPs and to provide a complete and fully operational facility for the duration of the contract, unless otherwise indicated in the delivery orders or directed. Id. at C-3. The contract talks specifically about the replacement of complete systems. Data Item Description (DID) forms included in the contract contain "requirements for contractor data submittals required in the SOW [statement of work]." Protest File, Exhibit 8 at C-3. The form for the site survey report requires the contractor to "identify the areas where remediations may be accomplished by repairing, modifying or replacing equipment or installing new equipment and facilities . . . ." Id. at DID (Site Surveys) 10.1 (emphasis added). Similarly, when the contractor needs to obtain competition to purchase equipment or to hire subcontractors to help perform the work, the form for the work plan requires the contractor to obtain quotes from two suppliers or subcontractors for "each equipment/system proposed," and requires that "[w]here replaced equipment/systems are turned over to the contractor for disposal, every effort should be made to obtain credit from the disposal of this equipment/system towards reducing the cost of the contract." Id. at DID (Work Plans) 10.3 (emphasis added). The contract also provides that: The contractor shall furnish to the Government, when and if ordered, the supplies or services set forth in the Schedule up to and [sic] the amount of $5,999,999.00 per year not to exceed $29,999,999.00 for the total of five years. Protest File, Exhibit 8 at H-7. The $5,999,999 figure was arrived at by dividing the total funds budgeted to the contract by five, the number of years of the contract's duration. Transcript at 186. According to the contracting officer, the value of the approximately seventy delivery orders issued to Siebe during the first year is about $12,000,000. Id. at 189. Documents submitted subsequent to the hearing on the merits show that, as of October 12, 1995, the Army has issued purchase orders totaling $27,174,429, including $5,047,416 in Federal Information Processing resources. Respondent's Supplemental Submission at 6- 8 (unnumbered) (Remediation Contract Status). The contract contains an "Organizational Conflicts of Interest" clause, which provides in part as follows: Since the services to be performed by order(s) under this contract include the preparation of a scope of work or cost estimate, it is understood and agreed, pursuant to Subpart 9.505 of the Federal Acquisition Regulations [sic] that: a. The contractor and its affiliates, associates, subsidiaries, subcontractors, and consultants are hereby prohibited from and shall not submit bids or offers or otherwise participate directly or indirectly in the preparation of any response to any solicitation issued by the Government or perform any portion of a contract awarded by the Government, which includes or relates to, all or any portion of the scope of work or estimate prepared by the contractor by order(s) under this contract. . . . . e. This restriction is limited to either (a) the initial solicitation(s) issued by the Governments [sic] which results in an award of a contract, or (b) a period of two years from the date of issuance of the final payment on order(s) under this contract, whichever occurs first. Protest File, Exhibit 8 at H-1 to -2. The Protested Delivery Orders Protested delivery order numbers 17, 30, 62, 66, 84, 88, and 92 are for the replacement of fire alarm systems at various military medical facilities. See Protest File, Exhibits 38-39. Protested delivery order number 10 is for replacement of a fire alarm system and removal and replacement of existing unitary control unit devices (automated temperature control devices) at Evans Army Community Hospital at Fort Carson. Protest File, Exhibit 13. This delivery order is the first phase of a planned replacement of the hospital's entire utility control system. Transcript at 177-78. When the delivery order was issued on September 30, 1994, neither the fire alarm system, nor the utility control system, was working properly. Protest File, Exhibits 10, 12. Lacking the time to negotiate a fixed price for delivery order 10, the Army ordered the work from Siebe on a time and materials basis, using fiscal year 1994 funds. The work on delivery order number 10 is, at most, thirty-eight percent complete. Transcript at 471-73. Protested delivery order number 47, for replacement of the entire utility control system at Evans Army Community Hospital, is the second phase of the work begun under delivery order number 10. Protester Williams' Exhibit 33. A Brief History of the Remediation Contract Because of shrinking budgets and limited manpower, the U.S. Army Medical Command decided to award several large contracts under which the Army could issue delivery orders for "remediation" work necessary to maintain the accreditation of the medical facilities under its command. The Army's intent was to create a vehicle through which the Army could issue delivery orders for any remediation work that MEDCOM's Operation and Maintenance funding could legally be used for. Transcript at 29- 34, 73. The drafters of the solicitation for the medical remediation contract at issue here used as a model an energy remediation contract issued in 1992 by the U.S. Army Forces Command. Transcript at 29. Although the terms are similar, the energy remediation contract contains the following sentence in the statement of work: This energy remediation contract is for the repair/replacement of facility energy and utility systems. Protester Williams' Exhibit 2 at C-1. According to the contracting officer, the above-quoted sentence was omitted from the medical remediation contract in order to broaden, rather than limit, the scope of work. Transcript at 143-44, 247-48. On April 22, 1994, the Corps published a synopsis in the Commerce Business Daily (CBD) announcing its intention to procure medical facilities remediation services. The CBD notice described a solicitation for "[f]acilities remediation services at all Government Medical Installations" and stated that "[t]his remediation effort includes, but is not limited to environmental, logistical, operation and maintenance." The notice also indicated that "[t]he objective of the project is to provide quick response for the remediation of failed or failing facilities in a cost effective method." Protest File, Exhibit 4. The CBD notice was published in section R of the CBD, the section for advertising "Professional, Administrative, and Management Support Services." Protester Williams' Exhibit 3. The contracting officer considered this to be the most appropriate category, given the broad range of requirements included in the contract. Transcript at 244. Contracting opportunities for the replacement of utility control systems are usually found in sections Y or Z of the CBD. Id. at 328. Neither Williams nor HSQ asked for a copy of the solicitation; neither firm recognized the notice as one for a procurement in which it might be interested. Id. at 332, 391. Approximately 250 firms did ask for a copy of the solicitation, however. This included several firms prominent in the utility controls field. Protest File, Exhibit 32. Four offerors submitted proposals in response to the solicitation, and all four were selected for contracts. Id., Exhibits 7, 8. All of the offerors recognized that replacement of facilities systems could be required. For example, John J. Kirlin, Inc.'s proposal contained the following statement: General requirements are to include all work to repair, replace or redesign failed facility systems as required by the Medical Facility Remediation request, in a timely manner. Respondent's Exhibit 1. EARTH TECH, another successful offeror, stated in its proposal that: The EARTH TECH Team has provided exactly the type of health care remediation services required. These include single and multidiscipline projects that address the upgrade and/or replacement of failed or failing facilities and facilities systems. Id. The other two successful offerors, Syska and Hennessy and Siebe, similarly referenced their experience in design, installation and replacement of various systems. Id. When the Army needs work done, it simply places a delivery order, without further competition, to one of the contractors, based upon criteria developed by the contracting officer. The criteria include whether a contractor is already mobilized on a site, any unique or special capabilities of the contractor, and current and past performance. Transcript at 178-81. The contractor is required to begin work within one day after receiving the order. Protest File, Exhibit 8 at H-7. Discussion The protesters have attacked delivery orders 10, 17, 30, 47, 62, 66, 84, 88, and 92 in several ways. First, they maintain that the delivery orders, which are all for replacement of fire alarm systems or utility control systems, or both, are outside the scope of Siebe's medical facility remediation contract. With respect to delivery order 10, the protesters also argue that the Corps violated the Anti-Deficiency Act by funding that delivery order with fiscal year 1994 funds without first establishing a bona fide need for the work. Next, the protesters allege that the delivery orders are invalid to the extent their value exceeds $5,999,999, which the protesters maintain is an absolute yearly contract ceiling. Finally, protester HSQ argues that the Corps is permitting Siebe to violate the contract's Organizational Conflict of Interest clause by having Siebe prepare workplans for the work it will perform, and then allowing Siebe to perform that work. As discussed below, we find no merit to any of these grounds. Motion to Dismiss The Corps has moved to dismiss for lack of an interested party those parts of the protests relating to delivery order 10. According to respondent, since neither Williams nor HSQ is capable of performing the work covered by that delivery order, the protesters are not "prospective offerors" for the competitive procurement which they seek to compel. Moreover, according to respondent, even if the protesters were capable of performing the work, delivery order 10 is sufficiently complete that the Board would never order respondent to terminate the delivery order. Thus, respondent argues, the protesters could never hope to obtain meaningful relief with respect to delivery order 10. We deny respondent's motion. The evidence adduced at the hearing on the merits clearly established that the work covered by delivery order 10 is exactly the type of work that the protesters commonly perform. Thus, they qualify as prospective offerors with a direct economic interest in the award of the contract. 40 U.S.C.A. 759(f)(9)(B) (West Supp. 1995). With respect to respondent's contention that the work on delivery order 10 has progressed beyond the point of no return, we are not certain that that is the case. The evidence showed that there is much work yet to be done. If the protesters were to prevail in their challenges to delivery order 10, the Board would likely ask the parties to suggest possible ways of dividing up the work such that the prevailing parties could obtain some measure of relief without causing the Government to incur large amounts of unnecessary expense. The Merits Scope of the Contract The protesters' main contention in these protests is that the delivery orders for replacement of fire alarm and utility control systems are outside the scope of Siebe's remediation contract. Protesters read Siebe's contract as including within its scope only repairs of such systems and maintain that the replacement work covered by the protested delivery orders should have been procured competitively. In determining whether a modification falls within the Competition in Contracting Act's competition requirements, the question to be answered is "whether the contract as modified materially departs from the scope of the original procurement." AT&T Communications, Inc. v. Wiltel, Inc., 1 F.3d 1201, 1205 (Fed. Cir. 1993). "The analysis thus focuses on the scope of the entire original procurement in comparison to the scope of the contract as modified. Thus, a broad original competition may validate a broader range of later modification without further bid procedures." Id. "An important factor in determining the scope of the original competition is 'whether the solicitation for the original contract adequately advised offerors of the potential for the type of changes during the course of the contract that in fact occurred, or whether the modification is of a nature which potential offerors would reasonably have anticipated.'" Id. at 1207 (quoting Neil R. Gross & Co., B- 237434, 90-1 CPD 212, at 3 (Feb. 23, 1990). Although AT&T concerned contract modifications rather than delivery orders issued under a task-order type contract, we think the same analysis applies. Both delivery orders and change orders tell the contractor to do something; the question in both cases is whether that something is within the scope contemplated by the original procurement. Here, that question is easily answered. Although the solicitation did not define what it meant by "remediation" work, it did inform offerors that "instrumentation projects will involve energy monitoring and control systems and fire alarm systems." The data item description forms included in the solicitation made clear that the Government was contemplating "repairing, modifying or replacing equipment or installing new equipment and facilities." Any prospective offeror which read the solicitation should have realized that replacement of fire alarm or utility control systems was contemplated by the contract. In fact, all four offerors did realize that replacement of these types of systems was contemplated; all four included statements in their proposals about their experience and capabilities in this area. Thus, at least as far as the offerors were concerned, replacement of fire alarm and utility control systems could not have been unexpected. Of course, the protesters were not offerors and they make much of that fact. The protesters maintain that since the synopsis for the medical remediation contract was "hidden" in section R of the CBD, they did not request a copy of the solicitation. If they had requested a copy, protesters argue, they would have read it to exclude replacement of fire alarm and utility control systems. This argument, in addition to being farfetched, is not supported by the evidence. Approximately 250 firms, including several companies prominent in the utility controls field, requested copies of the solicitation. The language of the synopsis, although vague, was enough to put potential contractors on notice of a possible contracting opportunity. As far as the synopsis being located in section R of the CBD, the contracting officer determined that section R, "Professional, Administrative and Management Support Services," was the appropriate category, given the broad range of requirements included in the contract. Although we would not have put it there, protesters have not shown that the contracting officer's decision was unreasonable. The protesters point to three additional aspects of the procurement which allegedly show that replacement of fire alarm and utility control systems was intended to be outside the scope of Siebe's contract. First, the protesters find significant the fact that the Army removed language used in the energy remediation contract -- the model for the medical remediation contract -- which explicitly stated that the purpose of the contract was "for the repair/replacement of facility energy and utility systems." Protesters contend that the Corps' decision to omit this sentence from the medical remediation contract means that respondent intended that replacement of these systems not be included within its scope. Again, the evidence does not support protesters' contention. The contracting officer testified that she omitted the above-quoted language from the medical remediation contract in order to broaden, rather than limit, the scope of work. As discussed above, the language of the medical remediation contract is broad enough to include replacement of energy and utility control systems, even without the omitted sentence. Second, protesters argue that the protested delivery orders are outside the scope of the contract because their value, when combined with the value of other, non-protested, delivery orders, exceeds the $5,999,999 yearly figure included in section H of the contract. We do not think this number is dispositive here. First, as discussed above, the scope of work clearly contemplates replacement of fire alarm and utility control systems. Second, as discussed in more detail below, if there is a ceiling amount in the contract, it is $29,999,999 -- not $5,999,999 -- and this amount has not been exceeded. Finally, the evidence shows that yearly figure used in the contract was not intended to define the contract's scope; it was arrived at simply by dividing the total funds budgeted for the contract by five, the number of years of the contract's duration. Given all of the above, protesters' argument that issuance of delivery orders for replacement of fire alarm and utility control systems constitutes "an alteration in the work so drastic that it effectively requires the contractor to perform duties materially different from those originally bargained for," AT&T at 1205 (quoting Allied Materials & Equipment Co. v. United States, 569 F.2d 562 (Ct. Cl. 1978)), must fail. Finally, protesters argue that the fact that the contract requires a "quick response" from the contractor means that only repairs (as opposed to replacements) are contemplated by the contract. Reading the contract as a whole proves protesters wrong. The contract requires the contractor to perform many time-consuming tasks after receiving a delivery order, including surveying the problem, submitting a report, creating a plan for the work to be done, obtaining approval by the Government, and performing the work. The time limits contained in the contract require the contractor to begin work on the survey within one day after receiving the delivery order. The "quick response" referred to in the contract refers to both the Government's desire to contract for the work quickly (i.e., through issuance of delivery orders rather than obtaining competition for each task) and the contractor's need to begin the work promptly. There is no indication that the "quick response" language was intended to limit the scope of the contract to small projects which could be accomplished quickly. The Bona Fide Needs Rule Protesters allege that the Corps violated the Anti- Deficiency Act by funding delivery order 10 with fiscal year 1994 funds without first establishing a bona fide need for the work. We deny this ground of protest as well. Under the Anti-Deficiency Act, appropriations are available to complete contracts properly made within the period of availability. 31 U.S.C. 1502(a) (1988). Under the Comptroller General's longstanding interpretation of this statute, "[a]n agency may obligate a fiscal year appropriation to meet a legitimate, or bona fide, need arising in the fiscal year for which the appropriation was made. Consistent with this rule, we have held that delivery of goods or performance of services in a fiscal year subsequent to the year in which a contract is executed does not necessarily preclude charging of earlier fiscal year appropriations." Matter of: Proper Appropriation to Charge for Expenses Relating to Nonseverable Training Course, 70 Comp Gen. 296, 296-97 (1991) (citations omitted). The applicable test is whether the goods or services are intended to meet a present need of the agency, regardless of when the work under the contract is completed. Matter of: Proper Fiscal Year Appropriation to Charge for Contract and Contract Increase, July 22, 1986, 65 Comp. Gen. 741 (1986). We found as fact that on September 30, 1994, the day delivery order 10 was issued, neither the fire alarm system nor the utility control system at Evans Army Hospital was working properly. Thus, on that date, the Army had a bona fide need for work on those systems. Protesters maintain, however, that, because delivery order 10 was just the first phase of a total replacement of the hospital's utility control system, and the rest of the project was still in the planning stages, the Army's need for the work covered by delivery order 10 was not "firm and complete" in fiscal year 1994. Thus, protesters argue, without completed plans for the full replacement, there was no bona fide need for delivery order 10. Protesters confuse inefficiency with illegality. The Army found itself on the last day of the fiscal year with enough money to fund only part of the replacement project at Evans Army Hospital. Lacking the time to hold a competition, or even to negotiate a fixed price for the work, the Army decided to issue a delivery order, on a time and materials basis, to Siebe. We certainly understand the protesters' frustration; it is hard to believe that the Army could not have done a better job for the taxpayers by waiting until it could fund the entire project and then holding a competition to get the best price. Managing resources in an inefficient manner, however, is not the same thing as lacking a bona fide need for the work. On September 30, 1994, a clear need existed for work on the fire alarm and utility control systems. The fact that the work covered by delivery order 10 is part of a bigger project -- replacement of the hospital's entire utility control system -- does not mean that the need to replace the fire alarm system and unitary control devices was not bona fide. The evidence in this case shows that it was. Contract Ceiling Protesters' next argument is that the protested delivery orders are invalid to the extent their value exceeds $5,999,999, which protesters maintain is an absolute yearly contract ceiling. We deny this ground of protest. The contract states as follows: The contractor shall furnish to the Government, when and if ordered, the supplies or services set forth in the Schedule up to and [sic] the amount of $5,999,999.00 per year not to exceed $29,999,999.00 for the total of five years. This clause obligates the contractor to accept orders from the Government up to the amount of $5,999,999 per year. It does not, as protesters contend, set a yearly contract ceiling which can never be exceeded. The clause simply permits the contractor to decline delivery orders after the stated amount is reached. The contract ceiling, if there is one, is $29,999,999, and that amount has not been exceeded. Organizational Conflict of Interest Protester HSQ argues that the Corps is permitting Siebe to violate the contract's Organizational Conflict of Interest clause by having Siebe prepare workplans for the work it will perform, and then allowing Siebe to perform that work. HSQ misreads the clause which forms the basis for this ground of protest. The Organizational Conflicts of Interest clause provides: a. The contractor and its affiliates, associates, subsidiaries, subcontractors, and consultants are hereby prohibited from and shall not submit bids or offers or otherwise participate directly or indirectly in the preparation of any response to any solicitation issued by the Government or perform any portion of a contract awarded by the Government, which includes or relates to, all or any portion of the scope of work or estimate prepared by the contractor by order(s) under this contract. . . . . e. This restriction is limited to either (a) the initial solicitation(s) issued by the Governments [sic] which results in an award of a contract, or (b) a period of two years from the date of issuance of the final payment on order(s) under this contract, whichever occurs first. The purpose of this clause is to prevent one contractor from obtaining an unfair advantage over other contractors in future competitive procurements. See 48 CFR 9.505-2 (1994). The clause accomplishes this purpose by prohibiting the contractor from bidding or working on future contracts which use a scope of work or cost estimate prepared by the contractor under this contract. The Organizational Conflicts of Interest clause has no applicability to the delivery orders at issue in these protests. Siebe's contract requires Siebe to propose plans for accomplishing certain work, have the plans approved, and then perform the work according to plans. Siebe is not preparing scopes of work or cost estimates for use in future competitive procurements; it is merely carrying out the requirements of the contract. Decision For the reasons discussed above, the protests are DENIED. _________________________ ROBERT W. PARKER Board Judge I concur: ________________________ STEPHEN M. DANIELS Board Judge DANIELS, Board Judge, concurring. At the heart of these protests are serious questions about the budgeting and contracting practices of the Army Corps of Engineers. Does the agency manage its money in such a way that it does not know until the end of a fiscal year how much it will have to spend on necessary projects? Does the Corps on a regular basis acquire goods and services through the non-competitive issuance of delivery and task orders against vague, open-ended contracts, rather than by competitive procurements? Does the Corps' means of acquiring goods and services effectively limit the pool of prospective contractors with which the agency might deal, excluding firms which have specialized expertise and could provide it to the Corps at prices which are more cost-effective than the prices the agency is now paying? Is there a link between the agency's budgeting practices and its contracting practices? In particular: Is the Corps contracting in an inefficient way because bad budgeting practices leave the contracting personnel no time to acquire goods and services more efficiently? Is the Corps spending more money (and if so, how much?) by avoiding competition than it might be saving by using contracting practices which cede to private companies much of the agency's responsibility for definition of work and selection of firms to perform it? These are extremely important questions, and the taxpayers deserve answers to all of them. This Board is not equipped to ferret out the answers, however; we are administrative judges, not management analysts or investigators. And the protest process is not the place for such an inquiry to take place; it calls on us to decide whether a challenged agency action violated statute or regulation, not whether that action was wise or foolish. On the legal issues raised by the protesters, this decision is correct. _________________________ STEPHEN M. DANIELS Board Judge VERGILIO, Board Judge, dissenting. I respectfully dissent from the conclusion of the majority. Through the placement of the protested delivery orders, the agency is circumventing and violating the mandates for competition found in statute and regulation, as well as the conditions of its procurement authority as delegated by the General Services Administration (GSA) and as issued from within the agency. The agency has placed or intends to place the protested delivery orders without any assurance or basis to reasonably conclude that the orders will be in the best interests of the United States. Orders which may be expedient for particular agency personnel do not necessarily represent legitimate procurements. The contentions of the agency and Siebe regarding the broad scope of their ordering agreement are inconsistent with the language of the solicitation underlying that agreement and the limits and requirements of then-existing delegations of procurement authority from the GSA and from within the agency. Findings of Fact Requirements and acquisition plan 1. The agency developed an acquisition plan, described on the signature page as for the repair and maintenance of Army/Air Force facilities, and on the cover page as for "facility remediation." Exhibit 2.[foot #] 1 The plan describes the "objective" behind the proposed program: The program that has been mutually agreed to by Health Services Command and the Air Force is a team approach to investigate problems that are encountered by the facilities. The intent of this contract is to be able to respond to needs of the facilities in a timely manner. This will be a firm-fixed price time- and-materials delivery order contract for supplies, services, with construction where required. U.S. Army Engineer Division, Huntsville will act as project managers and perform all contracting functions. The work for individual projects will be reflected in delivery orders. Id. at 1. Among the contracting considerations the plan describes is the following: Essentially this is a service intensive acquisition with relatively minimal supplies. This remediation effort includes, but is not limited to, environmental, logistical, operation and maintenance. . . . The lack of timely remediation increases cost. When problems are not corrected in a timely manner, they require longer down time and are more costly to remedy. The contractor will be required to perform all necessary operations involving surveying the problem, recommending a solution, and remediation of the problem in a timely manner and shall maintain the capability to provide quick response for the remediation of facilities. Id. at 3. Procurement approval request 2. A document captioned "Procurement Approval Request for Delegation of Procurement Authority for Facility Remediation" and dated 20 April 1994 describes the underlying facility remediation project for the subject Department of Defense facilities. ----------- FOOTNOTE BEGINS --------- [foot #] 1 All referenced exhibits are in the protest file. ----------- FOOTNOTE ENDS ----------- The project will consist of site surveys, remediation audits, feasibility studies, calculations, design, construction, equipment startup and testing and/or repaint, and training required to implement the remedial project awarded. The projects include, but are not limited to, labor, equipment, materials, software, applicable engineering documentation, and other necessary services and/or products required to design, implement, test the remedial projects and to provide a complete and fully operational facility for the duration of the contract, unless otherwise indicated in the delivery orders or directed. Exhibit 3 at 2 ( 2.b). 3. The request describes the federal information processing (FIP) resources to be acquired: The FIP resources to be acquired will vary according to the requirements at the various locations. The replacement will generally require the following FIP resources: a. Power monitoring and control system to monitor the normal and standby sources and control transfer of power from one source to the other. b. Sensors, digital control panels, data control unit panels and other equipment required for the connection with the existing EMCS (energy monitoring and control system). Exhibit 3 at 2 ( 4). 4. The request estimates costs over the contract life of five years: $2,500,000 FIP equipment (including software) 2,500,000 FIP maintenance services 2,500,000 FIP support services 485,000 FIP related supplies $22,015,000 TOTAL Non-FIP resources $30,000,000 TOTAL CONTRACT COST Exhibit 3 at 3 ( 6). The request references no data supporting these estimated dollar values and contains no reference to the agency's FIP acquisition plan which might support the estimates. 5. The requirements analysis which underlies the request contains the following, with references to the FIRMR, the Federal Information Resources Management Regulation: (201-20.103-3) Description of Requirements. a. The replacement of the existing equipment will provide energy savings, decreased maintenance requirements and higher reliability. The performance of FIP resources included in the replacement must comply with the following requirements: (1) Be capable of monitoring and controlling the normal and standby power sources and control transfer of power from one source to the other. (2) The sensors, digital control panels, data control unit panels and other equipment must be capable of providing the correct data to the existing EMCS [energy monitoring and control system]. b. Requirements in Terms of Functions to be Performed. (1) System Hardware/Software Functions. The projects include equipment that is monitored by remote sensors. Data from the remote sensors is transmitted via two-way radio frequency (RF), one-way FM radio, telephone lines, or fiber optics lines to a central operating station. The central operating station functions as an utility control system and supervisory control and data acquisition system. Software requirements are provided by the existing EMCS systems. Minor modifications to the existing software to add new monitoring and control points will be required. (2) System Environment. The FIP resources to be acquired do not require extraordinary shelter or protection from its operating environment. c. Requirements in Terms of Possible Competition. The FIP resources to be acquired are readily available in the competitive open market from multiple sources. d. Qualitative and Quantitative Requirements. The FIP resources to be acquired will meet current industry standards for the specific type of equipment in consideration. The general performance and end-use objectives of the FIP resources are specified in the request for proposal. No special technical or performance requirement outside industry accepted practices has been specified in the request for proposal. The quantity of FIP resources to be acquired will depend on the contractor proposed system designs. e. Aggregating Requirements. The sensors and other information processing components for this acquisition are system specific and at the end of the flow of data. The FIP resources to be acquired for these projects are not suitable for other aggregated uses at other functions or organizations. Exhibit 3, Appendix A at 7-8 ( 3). Procurement authority 6. A specific activity DPA (delegation of procurement authority) for CEHND-IM, dated December 15, 1993, signed by the Director of Information Management, Department of the Army, U.S. Army Corps of Engineers, with a delegation reference number, states, "When conducting a contracting action under this Specific Activity Delegation, the contracting officer should insert a contract clause in each solicitation and contract citing this number as a 'specific agency' delegation. (Refer to FIRMR 201- 39.5202-3 for details.)" Exhibit 3, Memorandum. With a signature date of May 2, 1994, the Director of Information Management, CEHND-IM, approved the internal DPA in the above- referenced (Findings 2-5) procurement approval request. Id., Procurement Approval Request at 5. 7. The internal delegation of authority referenced by number, as discussed in the above finding, specifies that the contracting activity is granted blanket authority such that the activity may contract for 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 $5,000,000 ($500,000 for a specific make and model specification or for requirements available from only one responsible source). Supplemental Submission, Memorandum: Department of the Army, Director of Information Systems for Command, Control, Communications & Computers to Deputy Commander, Directorate of Information Management, U.S. Army Corps of Engineers (Sept. 13, 1993). Solicitation 8. On April 18 and 25, 1994, the Commerce Business Daily (CBD) contained notice of the agency's procurement of facilities remediation services; the "contract will be a one-year time-and- materials, service type contract with 4 option years." The notice uses the word remediation; it does not use the word replacement. The notice, which does not mention FIP resources, was not contained or referenced under a FIP-related heading. Exhibit 4. 9. The agency issued a request for proposals. The solicitation, as issued and amended, does not use the phrase FIP resources (or any similar term), does not contain a clause citing the specific agency delegation, Finding 6, and does not reference the FIRMR. Exhibit 5. However, the solicitation identifies as one of several objectives: "Instrumentation projects will involve energy monitoring and control systems and fire alarm systems," id. at C-1 ( C.1.0), and does use the word "software" in identifying the contractor's overall responsibilities--"The contractor shall be responsible for all . . . including, but not limited to labor, equipment, materials, software, applicable engineering documentation, and other necessary services and/or products required to remediate, implement, test the awarded MFRPs and to provide a com[p]lete and fully operation facility for the duration of the contract, unless otherwise indicated in the delivery orders or directed." Id. at C-3 ( C.3.1.2). The solicitation does not identify with particularity any requirement recognized by the agency in the procurement request, Findings 2- 5. Id. More specifically, the solicitation does not identify an agency need to replace any FIP resources, Findings 3, 5. Exhibit 5. The solicitation specifies that the objective of the contract is "to provide quick response to remediation situations relating, but not limited to, the mechanical, electrical, instrumentation, security and safety areas of Government medical and other facilities in a cost effective manner." Exhibit 5 at C-1 ( C.1.0). 10. Among the special contract requirements of the solicitation is one on "orders": b. . . . [T]he Government shall be under no obligation to issue any particular number or types of orders, and no liability to the contractor shall be incurred in the event that a certain number or types of order are or are not issued. The contractor shall furnish to the Government, when and if ordered, the supplies or services set forth in the Schedule up to and [sic] the amount of $5,999,999.00 per year not to exceed $29,999,999.00 for the total of 5 years. . . . . d. For the duration of the contract, the contractor shall maintain the capability to perform the orders issued hereunder on a short reaction basis, which is defined as being able to meet one (1) work day response time, from time of receiving the order until performance commences. Exhibit 5 at H-8 ( H.15) (found in the contract, Exhibit 8 at H- 7 ( H.14)). Contract and delivery orders 11. With a signature date of September 7, 1994, a Government estimate addresses the replacement of the fire alarm system at a given hospital. As projected, the total cost for the work is $1,346,680.80 with 180 days of construction. Exhibit 6. 12. With a signature date of September 7, 1994, a Government estimate addresses repairs to unitary control units (UCUs) at a given hospital. As projected, the total cost for the work is $587,430.80 with 180 days of construction. Exhibit 6. 13. After receiving four responses to its request for proposals, the agency entered into agreements with all four companies, including an agreement with the intervenor, Siebe. The agreement with Siebe has an effective date of September 13, 1994. Exhibit 8. The agreement with Siebe establishes prices for individuals at four professional levels and four technical levels, in various zones, over the life of the agreement; sub- contracts are to be on a cost-reimbursable basis, as are materials and equipment and supplies; travel is to be reimbursed at cost. Id. at B-3 to B-86. As issued, and amended through the time of "award," the solicitation contained no minimum guarantee- -that is, the agreement permitted the agency to place orders or not. Exhibit 5 at B-3 (including amendments). However, the "contract" contains a paragraph inserted between lines, in a different font, without a reference to an amendment or contract modification: "The total Minimum obligation of the Government shall be $2,500.00 for the basic year and $2,500.00 for each option year." Exhibit 8 at B-3 ( 14). Elsewhere, the document specifies the total amount of the contract as $0.00. Exhibit 8 at 1 ( 15G). 14. On September 30, 1994, the agency issued delivery order 10 to Siebe, with a not to exceed price of $1,928,379.71, for Siebe to replace the fire alarm system and repair the UCU at the given hospital. Exhibit 12. The agency-provided scope of work attached to the delivery order identifies various and numerous FIP resources to be removed, replaced, or provided. Id., Scope of Work at 1-3. The scope of work identifies the existing conditions of the two systems: 2.2.1 Fire Alarm. The current condition of the fire alarm system and its interface with the mechanical smoke control systems cannot be maintained. The fire alarm is interconnected to the air conditioning control system through a combination of software and hard-wire interfaces so that modifications to either the fire alarm or air conditioning controls become[] complicated and unreliable. The hard-wired fire alarm panels in each smoke zone are now obsolete and replacement parts will be increasingly hard to find. 2.1.2 Unitary Control Unit (UCU): The current system of UCU installations in the Hospital consists of ASIC/1-8205(E) controllers, interfaced to the radiant heating/cooling panels through a Titus E/PT transducer. Space temperatures are measured using Precon ST-S E sensors. These controllers produce erratic space temperature control, resulting in oscillating space temperatures, unsatisfied occupants, and excessive energy consumption due to the mixing of the chilled and hot water supplies because of the rapid cycling of the radiant panels from heating to cooling. The increased cooling load has resulted in the inability of the chiller plant to provide adequate cooling to the Hospital. Id. at 1. 15. The agency has placed or intends to place additional delivery orders with Siebe which require the replacement of FIP resources, in particular fire alarm systems. Order Date Amount 17 9-30-94 $389,840.40 (replace fire alarm) 30 estimate $849,180.89 (replace fire alarm) 62 estimate $559,586.67 (replace fire alarm) (initial delivery order request: site survey portion in amount of $26,874.50) 66 estimate $244,783.18 (replace fire alarm) (initial delivery order request: site survey portion in amount of $15,805.56) 84 estimate $606,654.31 (upgrade fire alarm system) 88 estimate $2,198,928.63 (provide fire alarm system) (initial delivery order request: work plan portion in amount of $17,033) 92 estimate $249,771.46 (replace/provide fire alarm system) (initial delivery order request: work plan portion in amount of $8,295.32) Exhibits 37, 38, 39. Discussion The protesters maintain that the agency has failed to properly compete its requirements regarding the replacement of fire alarm systems and utility control systems--requirements, the protesters further maintain, which do not fall within the scope of the agency's agreement with Siebe. The agency has failed to abide by statute and regulation and conditions of its procurement authority in satisfying its protested requirements for FIP resources. This conclusion is compelled when one reviews the language of the agency's procurement authority, its procurement approval request, the dollar value of the requirements at issue, and the language of the agency's solicitation and agreement with Siebe. The other allegations of impropriety need not be reached. The agency and Siebe entered into the agreement with an effective date of September 13, 1994. Hence, the agreement cannot be a task and delivery order contract issued pursuant to statutory changes which have the earliest effective date of October 13, 1994. 10 U.S.C.A. 2304a, 2304c, 2304d (West Supp. 1995); 41 U.S.C.A. 251 note (West Supp. 1995). The FIRMR specifies: an acquisition "[c]onsists of a series of steps beginning with the requirements analysis and ending with the implementation of the most advantageous alternative to satisfy the requirement." 41 CFR 201-20.001(a)(1) (1994). The "requirements analysis" is "used to determine and document requirements for FIP resources." Id. 201-20.101. Agencies shall "[d]ocument in the requirements analysis the quantitative or qualitative requirements that must be met and why those requirements are necessary to meet the mission needs." Id. 20.103-3. At the time the agency issued the RFP it was aware of some of its requirements relating to the fire alarm system and utility control units. The need for replacement should have been part of the agency's acquisition planning and its plans for FIP resources. The estimates in support of the procurement authority request, Finding 4, are not supported in the record as reflecting actual, anticipated needs and requirements of the agency projected over the life of the agreement, if the agreement is to encompass the replacement of the fire alarm systems and utility control units as now argued by the agency and Siebe. The record suggests that the agency knew or should have known of its needs to replace the systems and units over the five-year life of the agreement. The estimates made shortly prior to award, Findings 11 and 12, and the delivery orders issued shortly thereafter, Findings 13 and 14 (delivery order 17), indicate a need for a considerable amount of FIP equipment. Estimates made for the replacement of other fire alarm systems within the first year of contracting indicate a greater need for FIP equipment and services. Finding 15. If, as the agency maintains, the general replacement of fire alarm systems and unitary control units falls within the scope of the competed remediation contract, then the dollar value of the FIP resources exceeds the amounts of agency- internal procurement authority. Prior to the issuance of the solicitation, the agency was aware of its particular FIP requirements involving replacement of particular systems, and was or should have been aware of other FIP requirements it now contends fall within the scope of the protested agreement. Although the procurement approval request expressly discusses some such requirements, the solicitation does not detail any such requirements, and does not mention that replacement of entire systems may be called for under the term "remediation." Nothing in the record suggests the accuracy of the estimates--the dollar value related to a DPA is not what drives requirements, rather a review of requirements establishes the need (or not) for a specific DPA from GSA and, perhaps, an internal agency delegation. The actions of the agency suggest that, intentionally or not, the agency failed to determine and reveal its true, anticipated requirements before embarking on this procurement. Although the agency expressly recognized requirements for FIP resources, it failed to draft a solicitation which would obtain competition to satisfy those requirements and did not put potential offerors on notice that such requirements were being competed. The solicitation does not reference the FIRMR as being applicable to the procurement. The notices in the Commerce Business Daily failed to provide notice of the now-asserted scope of the potential contract. The dollar values of the contract-life estimates found in the procurement approval request, Finding 4, indicate that the agency intended this procurement to encompass requirements of a far more modest scope than the agency and Siebe now maintain. Moreover, inconsistent with the now-espoused position of those parties is the solicitation-stated objective "to provide quick response to remediation situations relating, but not limited to, the mechanical, electrical, instrumentation, security and safety areas of Government medical and other facilities in a cost effective manner." Finding 9. The record does not demonstrate that the repair or replacement of fire alarm systems or of unitary control units as required under delivery orders constitutes a "quick response" remediation situation. The size and scope of the orders, Findings 11-15, reveal that more than a "quick response" is necessary to satisfy the agency's requirements; e.g., a remediation period of 180 days involving $1.3 or $.58 million represents a considerable expenditure of time and materials. A one-day response time, Finding 10, is not linked to such undertakings. I agree with the protesters that the agency is utilizing its agreement with Siebe in a manner contrary to statute, regulation, and the conditions of its procurement authority. I would grant the protests and fashion appropriate relief. ________________________ JOSEPH A. VERGILIO Board Judge