B-193287, MAY 8, 1979

B-193287, MAY 8, 1979

DIGEST: PROTEST BY MULTIPLE AWARD SCHEDULE CONTRACTOR THAT USER AGENCY UNDER TELEPROCESSING SERVICES PROGRAM OMITTED AND INCORRECTLY APPLIED VARIOUS COST FACTORS FOR PROTESTER AND EVENTUAL CONTRACTOR IN DETERMINING LOWEST OVERALL COST TO GOVERNMENT IS DENIED SINCE USER AGENCY'S COST EVALUATION UTILIZING ITS OWN FORMULA INSTEAD OF BENCHMARKING WAS REASONABLE AND UNIFORMLY APPLIED BY USER AGENCY.

TYMSHARE, INC.:

TYMSHARE, INC. (TYMSHARE), HAS PROTESTED THE AWARD OF CONTRACT BY THE SECURITIES AND EXCHANGE COMMISSION (SEC) TO FEDERAL CSS, INC. (FCSS), UNDER SOLICITATION NO. SEC-Q-552, ISSUED PURSUANT TO THE GENERAL SERVICES ADMINISTRATION'S (GSA) TELEPROCESSING SERVICES PROGRAM (TSP). THE CONTRACT IS FOR TELEPROCESSING SERVICES FOR THE SEC'S BUDGET APPLICATION IN ITS OFFICE OF THE COMPTROLLER.

TYMSHARE, FCSS AND OTHER COMPANIES HAVE ENTERED INTO MULTIPLE AWARD SCHEDULE CONTRACTS (MASC) UNDER GSA'S TSP. AS PROVIDED IN FEDERAL PROPERTY MANAGEMENT REGULATIONS, TEMPORARY REGULATION E-47, AUGUST 3, 1976, AS AMENDED, TSP IS THE MANDATORY MEANS WHEREBY FEDERAL AGENCIES ACQUIRE TELEPROCESSING SERVICES FROM THE PRIVATE SECTOR. MASC IS ONE OF THE ALTERNATIVE METHODS FOR ACQUIRING THE TELEPROCESSING SERVICES.

THE MASC DESCRIBES IN SOME DETAIL THE PROCEDURES FOR SELECTING A SOURCE FOR SERVICES. BRIEFLY, PARAGRAPH D.9 (BASIS FOR USER SOURCE SELECTION) PROVIDES THAT THE PRINCIPAL EVALUATION CRITERION IS LEAST SYSTEM LIFE COST. PARAGRAPH D.10 (USER SOURCE SELECTION CONSIDERATIONS) PROVIDES, AMONG OTHER THINGS, THAT GOVERNMENT ACTIVITIES SELECTING A SOURCE FOR A PARTICULAR ORDER SHOULD PREPARE A DESCRIPTION OF THE SERVICES NEEDED, DEVELOP AND APPLY TECHNICAL AND COST EVALUATION CRITERIA, INCLUDING RUNNING ANY NECESSARY BENCHMARKS, AND ELIMINATE FROM CONSIDERATION SOURCES WHICH FAIL TO MEET THE REQUIREMENTS. SELECTING WHICH CONTRACTOR SHOULD RECEIVE AN ORDER, IN SHORT, IS ON THE BASIS OF THE SOURCE WHICH MEETS THE USER'S REQUIREMENTS AT THE LOWEST OVERALL COST TO THE GOVERNMENT.

TYMSHARE CONTENDS THAT THE SEC "BOTH OMITTED AND INCORRECTLY APPLIED VARIOUS COST FACTORS FOR BOTH TYMSHARE AND FCSS IN THEIR COST EVALUATION WHICH ERRONEOUSLY RESULTED IN THE AWARD, BASED ON LOWEST OVERALL SYSTEM LIFE COST, *** TO (FCSS)." IT IS TYMSHARE'S POSITION THAT THE CONTRACT AWARDED TO FCSS MUST BE CANCELED IMMEDIATELY AND A NEW COST EVALUATION BE CONDUCTED BY THE SEC. TYMSHARE PROVIDES THE FOLLOWING RATIONALE:

"1. SOFTWARE CHARGES MUST BE EXCLUDED FROM THE COST EVALUATION AS FCSS ACKNOWLEDGES THE ADDITIONAL COST, BUT DOES NOT PROVIDE THE COST FACTORS. FCSS'S TSP MASC CONTRACT NUMBER GS-OOC-50260 STATES ON PAGE F 18.A OF SECTION F THAT 'A COMPONENT OF THE ARU (RESOURCE UNIT) RATE IS A SPECIFIC CHARGE FOR THE USE OF THESE PRODUCTS.' NOMAD IS INCLUDED IN THE LIST WHICH FOLLOWS ON PAGE F-18.A. HOWEVER, NO COMPONENT FOR NOMAD NOR ANY OTHER FCSS PRODUCT IS NOTED ON THAT PAGE. THEREFORE, SOFTWARE CHARGES MUST BE EXCLUDED FROM THE COST EVALUATION BECAUSE INCLUSION OF THE SOFTWARE CHARGES FOR ALL VENDORS EXCEPT FCSS PROVIDES FCSS WITH AN UNFAIR COMPETITIVE ADVANTAGE IN RELATIONSHIP TO THE OTHER MASC VENDORS WHO DO PUBLISH THEIR SOFTWARE CHARGES IN ACCORDANCE WITH GSA SOLICITATION NUMBER GSC-CDPR-H-00011-N-5-28-76. ***

"2. THE COST EVALUATION USED TO MAKE AN AWARD TO FCSS DOES NOT INCLUDE THE CORE UTILIZATION CHARGE AS DESCRIBED IN FCSS'S TSP MASC CONTRACT NUMBER GS-OOC-50260 ON PAGES F-8 AND F-9.A. THE CORE UTILIZATION CHARGES IN AN INTERACTIVE MODE ARE $1 PER UNIT HOUR FOR EACH 64K SEGMENT ABOVE 256K. SINCE NOMAD NORMALLY RUNS IN 512K OF CORE OR MORE, THAT WOULD REPRESENT AN ADDITIONAL CHARGE OF $4 OR MORE PER INTERACTIVE USAGE HOUR TO THE USER'S COSTS. THEREFORE, THE CORE UTILIZATION CHARGE MUST BE INCLUDED IN THE COST EVALUATION; AN ADDITIONAL CHARGE OF $4,320 IS ATTRIBUTED TO FCSS.

"3. I/O (INPUT/OUTPUT) EXECUTION CHARGES ARE NOT INCLUDED IN THE FCSS COST EVALUATION, ALTHOUGH I/O EXECUTION CHARGES ARE SPECIFICALLY SPELLED OUT ON PAGE F-10 SECTION F OF FCSS'S TSP MASC CONTRACT NUMBER GS-OOC- 50260. THE COST EVALUATION INCLUDES 30,000 LINES OF PRINTING PER MONTH, YET I/O EXECUTION CHARGES OF .0065 X LINES X ARU ARE NOT MADE A PART OF THE COST EVALUATION. AS THE USER WILL BE CHARGED FOR REMOTE PRINTING, I/O EXECUTION CHARGES OF $1,450 ARE INCLUDED IN THE COST ANALYSIS.

"4. THE FCSS VOLUME DISCOUNT OF 43.51% CAN ONLY BE APPLIED TO ITEMS 1, 2, 3, 4 AND 8 AS NOTED ON PAGE F-22 IN SECTION F SCHEDULE N OF FCSS'S TSP MASC CONTRACT NUMBER GS-OOC-50260. IN THE FCSS COST EVALUATION, THE 43.51% VOLUME DISCOUNT WAS IMPROPERLY APPLIED TO ALL ITEMS INCLUDING ANALYTIC SERVICES. THEREFORE THE APPLICATION OF DISCOUNTS IN THE COST ANALYSIS OF FCSS MUST BE RE-EVALUATED. THE APPLICATION OF VOLUME DISCOUNTS WAS ALSO INAPPROPRIATELY APPLIED TO TYMSHARE. TYMSHARE ALSO EXCLUDES ITEMS 5, 6, AND 7, FROM THE APPLICATION OF OVERALL VOLUME DISCOUNTS. ***"

THE SEC, IN ITS REPORT TO OUR OFFICE, CONTENDS THAT THE AWARD TO FCSS WAS PROPER AND REPRESENTED THE BEST VALUE TO THE GOVERNMENT. THE SEC REPORT STATES:

"IN THE FINAL COST EVALUATION, TYMSHARE'S OVERALL COST (OR SYSTEM LIFE COST) WITHOUT SOFTWARE PREMIUM, WAS COMPUTED TO BE $20,080.38; AND FCSS' OVERALL COST WAS COMPUTED TO BE $15,525.58.

"THE FINAL EVALUATIONS WERE MADE BASED UPON THE TECHNICAL INPUT, THE COST EVALUATION AND THE JUDGMENT OF THE EVALUATION PANEL AS TO THE VENDOR WHICH REPRESENTED THE BEST VALUE TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. BASED UPON THESE CRITERIA, FCSS WAS AWARDED THE CONTRACT ON SEPTEMBER 28, 1978. SERVICE WAS INITIATED ON NOVEMBER 1, 1978.

"TYMSHARE, INC. WROTE THE CONTRACTING OFFICER ON OCTOBER 23, 1978, AFTER HAVING BEEN DEBRIEFED BY THE COMMISSION, TO COMPLAIN ABOUT THE AWARD OF THE CONTRACT TO FCSS. THE COMMISSION REVIEWED TYMSHARE'S ARGUMENTS AND RE -EVALUATED THE OFFERS. THE RE-EVALUATION INDICATED THAT TYMSHARE'S OVERALL COST FOR THE IBM SYSTEM 370 WITHOUT THE SOFTWARE PREMIUM WAS $25,179.58 AND FCSS' OVERALL COST WAS $18,373.22.

IN ADDITION, THE SEC RESPONDED TO TYMSHARE'S POINTS, AS FOLLOWS:

"THE BASIS OF TYMSHARE'S PROTEST LIES MAINLY IN THEIR DISPUTE WITH THE WAY CERTAIN COSTS WERE EVALUATED. FOR EXAMPLE, FCSS QUOTES AN ARU RATE WHICH INCLUDES CHARGES FOR THE PROPOSED SOFTWARE PACKAGE WHEREAS TYMSHARE HAS SEPARATE PREMIUMS OR SURCHARGES FOR THE PROPOSED SOFTWARE PACKAGE. THE COMMISSION'S COST EVALUATION COMPUTED THE SYSTEM'S LIFE COST WITH AND WITHOUT SOFTWARE CHARGES. THIS WAS DONE SO A FAIR AND REASONABLE EVALUATION COULD BE MADE. TYMSHARE INSTEAD PROPOSES THAT THE CENTRAL PROCESSING UNIT ('CPU') UTILIZATION CHARGES SHOULD BE DIRECTLY COMPARED WITHOUT CONSIDERATION OF THE ADDITIONAL CHARGES FOR SOFTWARE. SUCH A COMPUTATION WOULD BE INACCURATE SINCE THE CHARGES FOR SOFTWARE MUST BE CONSIDERED AS AN ESSENTIAL PART OF THE SYSTEM LIFE COST.

"FEDERAL CSS HAS INDICATED THAT IT DOES NOT REQUIRE AN ADDITIONAL CORE FOR PROCESSING UTILIZATION IN EXCESS OF THE 256K BYTE PROVIDED WITHOUT CHARGE. HOWEVER, TYMSHARE ADVOCATES THAT ANY CHARGES FOR ADDITIONAL CORE UTILIZATION BY FCSS WOULD BE AT $1.00 PER HOUR PER EACH ADDITIONAL 64K CONFIGURATION. IT WAS DETERMINED THAT THE COMMISSION'S USAGE WOULD MOST LIKELY NOT EXCEED THE NO COST 256K BYTE; AND, THEREFORE, NO ADDITIONAL CHARGES NEED BE ASSESSED IN EVALUATING THE FCSS PROPOSAL AS OPPOSED TO THE ADDITIONAL CHARGES IMPUTED TO FCSS BY TYMSHARE.

"INPUT/OUTPUT EXECUTION CHARGES ('I/O') SHOULD BE ASSESSED SEPARATELY AGAINST FCSS WHEN AN I/O IS A READ OR WRITE TO A SELECTOR TYPE OR A LINE PRINTED, OR A CARD READ OR A CARD PUNCHED ON A REMOTE DEVICE, AND CHARGES WERE NOT PROPERLY ASSESSED IN THE INITIAL COST EVALUATION. THE INCLUSION OF THESE CHARGES WOULD NOT ALTER THE AWARD PATTERN, NOR HAVE CHANGED THE SUCCESSFUL VENDOR, ALTHOUGH IT WOULD INCREASE THE PRICE OF THE EVALUATED SYSTEM LIFE COST BY FCSS. THE EVALUATION OF FCSS' PRICE WOULD BE INCREASED BY APPROXIMATELY $1,199.

"SIMILARLY, THE EVALUATION OF THE PRICES FOR ALL VENDORS SHOULD BE ADJUSTED BY VOLUME DISCOUNTS INAPPROPRIATELY APPLIED TO ALL ITEMS NOT IDENTIFIED BY THE VENDOR'S REPRESENTATIVE AS BEING NONDISCOUNTABLE. THIS AMOUNT COUPLED WITH THE INCREASES AS A RESULT OF A RECALCULATION OF THE INPUT/OUTPUT CHARGE WOULD AMOUNT TO AN INCREASE OF APPROXIMATELY $2,850 FOR FCSS. THE APPLICABLE VENDOR DISCOUNTS WERE VERY CLOSE TO THE INITIAL EVALUATION OF TYMSHARE, HOWEVER TOTAL SYSTEMS LIFE COSTS HAD TO BE INCREASED BY ALMOST $5,100 DUE TO AN ERROR IN THE INITIAL EVALUATION OF CHARACTER PRINT CHARGES."

IN RESPONSE TO THE SEC REPORT, TYMSHARE STATES THAT "THE FOLLOWING POINTS, ADDRESSED IN SEC'S REPORT AND EVALUATION, ARE OF CONSIDERATION:"

"(1) THE CHARGES FOR TYMSHARE'S SOFTWARE PACKAGE, FOCUS, HAVE BEEN ERRONEOUSLY QUOTED TO BE 1.8 TIMES THE NUMBER OF TRU'S USED IN THE REEVALUATION PERFORMED BY SEC. THE CORRECT CHARGE IS 1.55 TIMES THE NUMBER OF TRU'S USED. CORRECTION OF THIS FIGURE WILL RESULT IN A LOWER OVERALL COST IN TYMSHARE'S PRICES.

"IN ADDITION, TYMSHARE'S SOFTWARE PACKAGE, EXPRESS, WAS INCLUDED IN THE REEVALUATION. TYMSHARE'S PROPOSAL MADE NO MENTION OF THIS PACKAGE. INCLUSION OF THE COSTS ASSOCIATED WITH THE USE OF THIS PACKAGE ARE, AT BEST, AN ERROR.

"(2) FCSS' CORE UTILIZATION CHARGES ARE STILL EXCLUDED IN THE REEVALUATION ANALYSIS. TYMSHARE FEELS THAT FAILURE TO CONSIDER THOSE CHARGES IN THE EVALUATION, RESULTS IN AN UNFAIR ADVANTAGE TO FCSS AND NOT THE BEST INTEREST OF THE GOVERNMENT SINCE THE SAME MAY BE OF CONSIDERABLE SIGNIFICANCE.

"(3) FCSS' SOFTWARE CHARGES ARE NOT IN THE EVALUATION. TYMSHARE FEELS THAT THE REASONS PRESENTED TO JUSTIFY SUCH ACTION ARE, AT BEST, WEAK."

TYMSHARE "STRONGLY SUGGESTS THAT THE ONLY FEASIBLE WAY TO MAKE A DETERMINATION OF THE LOWEST COST VENDOR IS TO ALLOW A BENCHMARK REPRESENTATIVE OF A TYPICAL USER PROGRAM TO BE RUN." IT IS TYMSHARE'S BELIEF THAT THIS BENCHMARK WOULD BE "A VALID DETERMINATION OF THE CPU USAGE AND I/O EXECUTION CHARGES, AS WELL AS OTHER ASSOCIATED CHARGES. ***" TYMSHARE PREPARED A COST EVALUATION, ESTIMATING THAT IT COULD PROVIDE TELEPROCESSING SERVICES TO THE SEC FOR $21,396.62 WHILE, SIMILAR SERVICES OBTAINED FROM FCSS WOULD COST $21,501.05, OR $104.33 MORE THAN TYMSHARE'S SERVICES.

TYMSHARE ESTIMATES THAT THE SEC WILL INCUR CORE UTILIZATION CHARGES AMOUNTING TO $4,320 UNDER THE FCSS TSP SCHEDULE CONTRACT. THIS FIGURE IS BASED ON TYMSHARE'S ESTIMATE THAT THE SEC WOULD PROBABLY NEED 512 K BYTES OF CORE IF FCSS' SERVICES WERE USED. THE INCLUSION OF THIS CHARGE RESULTED IN AN ADDITIONAL INCREASE IN TYMSHARE'S ESTIMATE AMOUNTING TO $1,080 SINCE CENTRAL PROCESSING UNIT (CPU) UTILIZATION CHARGES FOR BOTH VENDORS WERE ESTIMATED BY TAKING 25 PERCENT OF THE CORE UTILIZATION AND A FEW OTHER CHARGES.

THE SEC ESTIMATES THAT IT WILL NOT INCUR SUCH CHARGES. WE NOTE THAT, IN ITS PRICING STRUCTURE, FCSS DOES NOT CHARGE FOR THE FIRST 256 K BYTES OF CORE USED BUT CHARGES WILL BE MADE FOR ANY CORE USED IN EXCESS OF THIS AMOUNT. FCSS' PROPOSAL ESTIMATES THAT THE SEC'S TELEPROCESSING NEEDS SHOULD NOT EXCEED THE MAXIMUM NO-COST LIMIT. WE HAVE BEEN ADVISED THAT FCSS' CORE UTILIZATION CHARGES FOR THE FIRST 3 MONTHS OF OPERATION AMOUNTED TO $4.78. IN ADDITION, THE SEC ADVISED THAT BASED UPON THIS EXPERIENCE, THE NEED TO USE MORE THAN 256 K BYTES OF CORE IS NOT FORESEEABLE. WHILE IT APPEARS, BASED ON THE CHARGES INCURRED FOR THE FIRST 3 MONTHS, THAT THERE WILL BE SOME CHARGES FOR CORE UTILIZATION PROVIDED BY FCSS, WE BELIEVE IT IS NOT LIKELY THAT SUCH ADDITIONAL CHARGE WOULD BE A SIGNIFICANT AMOUNT.

TYMSHARE'S INITIAL OBJECTIONS CONCERNING THE INPUT/OUTPUT EXECUTION CHARGES AND APPLICATION OF VOLUME DISCOUNTS WERE ANSWERED BY THE SEC. TYMSHARE'S RESPONSE TO THE SEC'S REPORT CONTAINING THE REEVALUATION DID NOT RAISE ANY FURTHER OBJECTIONS CONCERNING THE SEC'S APPLICATION OF THE INPUT/OUTPUT CHARGES OR THE VOLUME DISCOUNTS. OUR REVIEW OF THE REEVALUATION SHOWS THAT THE SEC TOOK INTO ACCOUNT THE INPUT/OUTPUT CHARGES AND WE NOTE THAT SUCH CHARGES WERE PROPERLY ASSESSED BY THE SEC. IN REGARD TO THE VOLUME DISCOUNTS, WHILE TYMSHARE'S TSP PRICE LIST, SECTION F.16, SCHEDULE N - DISCOUNTS PROVIDES FOR A DISCOUNT TO THE GOVERNMENT OF 25.01 PERCENT, TYMSHARE'S EVALUATION INCORRECTLY INCLUDED 25.04 PERCENT AS ITS DISCOUNT. EVEN THOUGH THE USE OF THE CORRECT FIGURE WILL NOT SIGNIFICANTLY CHANGE TYMSHARE'S EVALUATION, SUCH SHOULD BE NOTED. NOTWITHSTANDING, THE SEC'S REEVALUATION OF THE PROPOSALS INCLUDES, AMONG OTHER THINGS, THE CORRECT DISCOUNT FIGURE FOR TYMSHARE AND THE NOTATION THAT FOR ITEMS 5, 6, AND 7 NO DISCOUNT WAS TAKEN.

WITH RESPECT TO TYMSHARE'S CONCERN WITH THE CHARGES FOR ITS SOFTWARE PACKAGE - FOCUS, TYMSHARE CONTENDS THAT SUCH WAS ERRONEOUSLY QUOTED BY THE SEC. IN REVIEWING THE 1978 FISCAL YEAR AUTHORIZED SCHEDULE PRICE LIST FOR TYMSHARE, WE FOUND THAT THE FACTOR TO BE USED TO DETERMINE PROCESSOR CHARGES FOR USING THE FOCUS SOFTWARE PACKAGE WAS 1.8 TIMES THE NUMBER OF TRU'S (A UNIT MEASURE OF COMPUTER RESOURCE UTILIZATION). OUR OFFICE HAS BEEN ADVISED THAT TYMSHARE REDUCED ITS SOFTWARE PACKAGE PREMIUM CHARGES ON FOCUS TO 1.55 TIMES THE NUMBER OF TRU'S EFFECTIVE NOVEMBER 1, 1977. HOWEVER, WE WERE ALSO ADVISED THAT THE GSA WAS NOT NOTIFIED OF SUCH CHANGE UNTIL OCTOBER 19, 1978. THEREFORE, THE SEC WOULD NOT HAVE HAD ANY KNOWLEDGE OF THE CHANGE IN THE SOFTWARE PREMIUM ON FOCUS UNLESS NOTIFIED BY TYMSHARE DURING THE DISCUSSIONS HELD IN SEPTEMBER 1978. NEVERTHELESS, CORRECTION OF THE SOFTWARE PREMIUM FOR FOCUS WOULD NOT CHANGE THE EVALUATION OR DETERMINATION OF THE SUCCESSFUL VENDOR BECAUSE IN ESTIMATING SYSTEM LIFE COSTS FOR TYMSHARE, THE SEC DID NOT ESTIMATE THE NUMBER OF TRU'S NOR DID THE SEC APPLY THE FOCUS SOFTWARE PREMIUM TO DETERMINE THE LOWEST OFFEROR. ANOTHER MATTER OF TYMSHARE'S INTEREST INVOLVES ITS EXPRESS SOFTWARE PACKAGE WHICH TYMSHARE STATES WAS NOT MENTIONED IN ITS PROPOSAL BUT WAS INCLUDED IN THE SEC REEVALUATION. WE NOTE THAT AS WITH FOCUS, THE SEC COST EVALUATION DID NOT APPLY THE EXPRESS SOFTWARE PREMIUM IN DETERMINIG THE SYSTEM LIFE COST. ACCORDINGLY, THE REEVALUATION'S INCLUSION OF EXPRESS WAS IN NAME ONLY AND AS SUCH DOES NOT AFFECT THE SYSTEM LIFE COST EVALUATION.

WITH RESPECT TO FCSS' SOFTWARE CHARGES, TYMSHARE CONTENDS THAT THESE CHARGES SHOULD BE INCLUDED IN THE SEC'S EVALUATION.

WE DISAGREE. FCSS' TSP PRICE LIST DOES NOT HAVE A SEPARATE SURCHARGE OR PREMIUM FOR ITS NOMAD SOFTWARE PACKAGE. HOWEVER, THIS DOES NOT MEAN THAT THE USER OF FCSS' SERVICES DOES NOT PAY FOR THE NOMAD PACKAGE. TO THE CONTRARY, THE COST OF THE NOMAD PACKAGE IS INCLUDED IN FEDERAL'S ARU RATE. IN OTHER WORDS, WHEN FCSS DETERMINES ITS BILLING OR RATE ALGORITHM (ARU), THE COSTS ASSOCIATED WITH THE NOMAD PACKAGE ARE INCLUDED THEREIN. THE RESULT IS THE USER OF FCSS'S SERVICES WILL, IN EFFECT, BE PAYING FOR NOMAD WHETHER OR NOT IT IS USED.

THE QUESTION OF WHETHER OR NOT TO APPLY THE SOFTWARE PREMIUM FACTOR IS OF NO CONSEQUENCE IN THE INSTANT PROCUREMENT BECAUSE THE SEC DID NOT ESTIMATE THE NUMBER OF TRU'S FOR TYMSHARE OR THE NUMBER OF ARU'S FOR FCSS. THE NUMBER OF TRU'S OR ARU'S CANNOT BE ACCURATELY FORECAST WITHOUT A SYSTEM BENCHMARK TEST.

IN THIS REGARD, THE GSA AUTOMATED DATA AND TELECOMMUNICATIONS SERVICE TSP HANDBOOK, OCTOBER 1978 (HANDBOOK), PROVIDES:

"PART 7 - EVALUATING TSP SCHEDULE CONTRACTS

"THE DEGREE OF EFFORT SHOULD BE COMMENSURATE WITH THE SIZE OF THE PROCUREMENT. THE DEGREE OF DETAIL, DEPTH AND THE ACCEPTABILITY OF SIMPLIFYING ASSUMPTIONS SHOULD BE SCALED TO THE ESTIMATED SYSTEM LIFE COST. REQUIREMENTS BELOW $200,000 ANNUALLY SHOULD REQUIRE ONLY THE MINIMUM DOCUMENTATION.

"PART 8 BENCHMARKS

"SELECTING ACTIVITIES MUST BENCHMARK ALL TECHNICALLY QUALIFIED TSP SCHEDULE CONTRACTORS FOR REQUIREMENTS IN EXCESS OF $200,000 ANNUALLY. IS RECOMMENDED THAT SELECTING ACTIVITIES ALSO BENCHMARK ALL TECHNICALLY QUALIFIED TSP SCHEDULE CONTRACTORS FOR REQUIREMENTS UNDER $200,000 ANNUALLY.

IT IS TYMSHARE'S POSITION THAT A BENCHMARK SHOULD BE UTILIZED IN THIS PROCUREMENT SINCE IT IS "THE ONLY FEASIBLE WAY" TO DETERMINE WHICH VENDOR HAS THE PROPOSAL WITH THE LOWEST OVERALL COST. WHILE WE AGREE THAT WITHOUT A BENCHAMRK TEST CPU CHARGES CANNOT BE AS ACCURATELY FORECAST AS WITH A BENCHMARK, IT IS OUR VIEW THAT A BENCHMARK TEST IS NOT THE ONLY FEASIBLE WAY TO DETERMINE THE LOWEST COST VENDOR.

THE SEC DEVELOPED A FORMULA (.25 (CONNECT TIME CHARGES PLUS STORAGE CHARGES PLUS I/O CHARGES PLUS REMOTE PROCESSING CHARGES)) WHICH PROVIDES A BASIS FOR DETERMINING CPU UTILIZATION CHARGES OF THE VARIOUS VENDORS IN LIEU OF BENCHMARK. THE FORMULA WAS BASED ON DISCUSSIONS WITH GSA OFFICIALS AND OTHERS EXPERIENCED IN USING TELEPROCESSING SERVICES. HAVE BEEN ADVISED THAT THIS FORMULA WAS UNIFORMLY APPLIED TO ALL OF THE QUALIFIED TSP VENDORS. IN ADDITION, WE NOTE THAT THE IMPLEMENTATION OF THE FORMULA IS SUBSTANTIALLY LESS EXPENSIVE THAN PERFORMING A BENCHMARK TEST. ALSO, WE ARE AWARE THAT NONE OF THE VENDORS OBJECTED TO THE UTILIZATION OF THE FORMULA. ACCORDINGLY, IN THE ABSENCE OF A BENCHMARK TEST, THE USE OF THE FORMULA APPEARS TO BE REASONABLE.

IN REFERENCE TO THE QUESTION OF WHETHER OR NOT TO BENCHMARK, OUR OFFICE IS COGNIZANT THAT WORKLOAD DEFINITION AND BENCHMARKING FOR THE SELECTION OF TELEPROCESSING SERVICES CAN BE A VERY COSTLY PROCESS FOR BOTH THE USER AGENCY AND THE TSP SCHEDULE CONTRACTOR. PART 8 OF THE HANDBOOK, SUPRA, REQUIRES THAT THE USER AGENCY BENCHMARK QUALIFIED TSP SCHEDULE CONTRACTORS FOR REQUIREMENTS EXCEEDING $200,000 ANNUALLY. SIMULTANEOUSLY, IT RECOMMENDS, NOT REQUIRES, BENCHMARK FOR REQUIREMENTS LESS THAN $200,000. HOWEVER, THIS RECOMMENDATION MUST BE READ IN LIGHT OF THE PART 7 OF THE HANDBOOK, SUPRA, WHICH ADVISES THAT THE SIZE OF THE PROCUREMENT SHOULD DICTATE THE DEGREE OF EFFORT. THE ANNUAL COST FOR THE SEC'S TELEPROCESSING REQUIREMENTS AMOUNTS TO LESS THAN $7,000, WHICH IS CONSIDERABLY LESS THAN THE MINIMUM DOLLAR AMOUNT NECESSARY TO REQUIRE BENCHMARKING. UNDER THESE CIRCUMSTANCES, SINCE THE SEC'S TELEPROCESSING NEEDS ARE RELATIVELY SMALL IN SIZE, WE DO NOT BELIEVE THAT THE HIGH COST OF PERFORMING A BENCHMARK WOULD BE IN THE BEST INTEREST OF THE GOVERNMENT.

IN CONCLUSION, OUR REVIEW OF THE RECORD DISCLOSED THE FOLLOWING MATTER WHICH WE BELIEVE IS APPROPRIATE FOR NOTING. TYMSHARE CHARGED A "PER PAGE" AND A "PER 1000 CHARACTER" AMOUNT FOR OUTPUT PRINTING SERVICES. IN THE SEC'S INITIAL COST EVALUATION, THE "PER 1000 CHARACTER" CHARGE WAS APPLIED INCORRECTLY. RATHER THAN APPLYING THE COST TO THE NUMBER OF CHARACTERS, THE SEC APPLIED IT TO THE NUMBER OF LINES PRINTED. THIS RESULTED IN THE UNDERESTIMATION OF THE CHARACTER PRINT COSTS BY A FACTOR OF 60 SINCE THERE ARE 60 CHARACTERS PER LINE. ACCORDINGLY, THE SEC'S INITIAL ESTIMATE OF $86.40 FOR THESE SERVICES WAS INCREASED SIGNIFICANTLY TO $5,184 IN THE REEVALUATION OF TYMSHARE'S PROPOSAL. YET, DESPITE SEVERAL OBJECTIONS TO THE SEC'S FIRST EVALUATION, TYMSHARE'S COST EVALUATION SUBMITTED WITH THE INITIAL PROTEST FAILED TO TAKE INTO ACCOUNT THE "PER 1000 CHARACTER" CHARGE AND USED THE $86.40 FIGURE DEVELOPED BY THE SEC'S INITIAL COST EVALUATION - A SERIOUS ERROR. IF THE DIFFERENCE BETWEEN THE INITIAL EVALUATION AND REEVALUATION COST FOR CHARACTER PRINTING FIGURES WOULD HAVE BEEN ADDED TO THE 3-YEAR SYSTEM LIFE COST FOR TYMSHARE'S SERVICES, THIS WOULD HAVE MADE TYMSHARE THE MORE COSTLY ALTERNATIVE EVEN ASSUMING ITS PROTEST OBJECTIONS HAD BEEN CONCEDED. ADDITIONALLY, WE ARE COGNIZANT THAT TYMSHARE DID NOT OBJECT TO THE SEC'S REVISED ESTIMATE FOR CHARACTER PRINTING IN ITS RESPONSE TO THE SEC'S REPORT.

BASED ON THE FOREGOING, TYMSHARE'S PROTEST IS DENIED.