B-229725, B-229726, B-229727, Mar 4, 1988, 88-1 CPD 234

B-229725, B-229726, B-229727, Mar 4, 1988, 88-1 CPD 234

PROCUREMENT - Competitive Negotiation - Offers - Evaluation Errors - Prices DIGEST: Protest that agency improperly evaluated awardee's price as low is sustained where the awardee proposed a 12-month basic termination liability (BTL) charge to the government and the solicitation provided that in evaluating price a BTL charge for any period of time that exceeded the contract's estimated service life of less than 12 months would be considered.

GE American Communications, Inc:

GE American Communications, Inc., protests the award of a contract to Contel ASC under Defense Communications Agency (DCA) telecommunications service request (TSR) Nos. AY27MAY-87-0087/I, 0088/I, and -0089/I. The contract is to provide telecommunications service between Kirtland Air Force Base in New Mexico and three other Air Force bases in the United States. GE contends that DCA improperly evaluated the cost proposals.

We sustain the protest.

Each TSR provided that award would be made to the firm submitting the offer most advantageous to the government, price and other factors considered. As issued, the TSRs stated that the contract's estimated service life was 12 months. DCA subsequently amended the TSRs to state, among other things, that the service life was "less than 12 months." Also, each TSR included the following statement with respect to offers that might include termination liability charges to the government:

"... If the inquiry the TSR contains an estimated service life, that period of time will be used for cost evaluation purposes. If no estimated service life is specified, evaluation will be based on a service life of one month. Should your offer contain any charges or other liability provisions for recoupment of unamortized invested capital which extend beyond the government's estimated service life, these items will be added to the total cost evaluation..."

GE and Contel submitted the two lowest offers. GE quoted a monthly recurring charge of $2,879 for each TSR; Contel quoted a monthly charge of $2,700. Contel also quoted a basic termination liability (BTL) charge of $32,400 for each TSR, "to be reduced by 1/12 for each month in service." DCA disregarded the BTL charge and awarded the contract to Contel as the lowest cost offeror.

GE argues that a service life of "less than 12 months" as stated in the TSRs means a service life of no more than 11 months. GE protests that one -twelfth of the BTL quoted by Contel therefore must be considered in the cost evaluation, since the BTL proposed by Contel exceeds the service life by at least 1 month. Under that theory, GE would be the lower-evaluated offeror.

Initially, we note that DCA contends the protest is untimely under section 21.2(a) of our Bid Protest Regulations, 4 C.F.R. part 21 (1987). DCA argues that the basis for protest involves an alleged ambiguity in the TSR statement of service life and, according to section 21.2(a)(1), therefore had to be raised before proposals were due. GE first complained about the matter after that time, however, in a protest to the contracting officer; the protest to our Office followed the contracting officer's denial of the protest at that level. DCA points out that since section 21.2(a)(3) of our Regulations states that we will consider an appeal from the denial of an agency level protest only if the initial protest itself was timely, we should dismiss GE's protest without reaching the merits.

We disagree, because we do not view the basis for protest as an ambiguous TSR statement. Rather, GE is complaining about the way proposals were evaluated in light of what the firm thinks is the only reasonable reading of the TSR. As such, the protest is timely under section 21.2(a)(2) of our Regulations, which applies to other than apparent solicitation improprieties, since GE protested within 10 working days after the basis for protest was known to GE, which was when GE learned of the way offers were evaluated.