B-175396, AUG 18, 1972

B-175396, AUG 18, 1972

BID PROTEST - ARBITRARY ACTION ALLEGED - BURDEN OF PROOF DENIAL OF PROTEST ON BEHALF OF COMPUTER INVESTORS GROUP, INC., AND DATA RECALL CORPORATION AGAINST THE AWARD OF A CONTRACT TO CAMBRIDGE MEMORIES, INC., UNDER AN RFP ISSUED BY THE U.S. ARMY COMPUTER SYSTEMS SUPPORT AND EVALUATION COMMAND, FOR A QUANTITY OF EXPANSION CORE MEMORY COMPUTER UNITS. WHEN IT IS ALLEGED THAT AGENCY ACTIONS WERE ARBITRARY OR CAPRICIOUS, THE PROTESTANT MUST MEET A HIGH STANDARD OF PROOF BY SHOWING THAT SUCH ARBITRARY AND CAPRICIOUS ACTION AS ALLEGED DID IN FACT EXIST. KECO INDUSTRIES, INC. V. UNITED STATES, 192 CT. CL. 773, 784 (1970). PROTESTANT HAS FAILED TO MEET THAT BURDEN OF PROOF AND, THEREFORE, THE PROTEST MUST BE DENIED.

TO FRIED, FRANK, HARRIS, SHRIVER & KAMPELMAN:

FURTHER REFERENCE IS MADE TO YOUR PROTEST ON BEHALF OF COMPUTER INVESTORS GROUP, INC., AND AS ATTORNEY IN FACT FOR DATA RECALL CORPORATION (DATA RECALL), AGAINST THE AWARD OF A CONTRACT TO CAMBRIDGE MEMORIES, INC. (CMI), UNDER REQUEST FOR PROPOSALS (RFP) NO. DAHC26-72-R 0009, ISSUED BY THE UNITED STATES ARMY COMPUTER SYSTEMS SUPPORT AND EVALUATION COMMAND (USACSSEC).

THE INSTANT SOLICITATION, ISSUED ON NOVEMBER 5, 1971, REQUESTED PROPOSALS ON A QUALIFIED PRODUCTS BASIS FOR AN ESTIMATED QUANTITY OF 37 EXPANSION CORE MEMORY COMPUTER UNITS TO INCREASE THE MEMORY CAPABILITY OF AN EQUAL NUMBER OF IBM 360/30 COMPUTERS FROM THEIR STANDARD MEMORY CAPACITY OF 64K BYTES TO A CAPACITY OF 128K BYTES. OFFERORS WERE ADVISED BY PARAGRAPH C- 38 OF THE RFP THAT THE PROPOSED EQUIPMENT MUST HAVE BEEN ON THE ARMY QUALIFIED EQUIPMENT LIST (QEL) BY OCTOBER 1, 1971.

IN ADDITION, PARAGRAPH F.1 OF THE SOLICITATION PROVIDED:

"F.1 THE APPLICABLE SPECIFICATION FOR THIS SOLICITATION IS AS FOLLOWS:

"AUTOMATIC DATA PROCESSING EQUIPMENT SPECIFICATIONS FOR BASOPS CORE MEMORY AUGMENTATION, USACSSEC PROJECT NO. S-00A-71-3, ISSUED UNDER COVER LETTER DATED 29 JULY 1971 AND ADDENDUM NO. 1, 15 SEPTEMBER 1971. QUESTIONS AND ANSWERS 1-29, AND ADDENDUM NO. 2, DATED 28 OCTOBER 1971."

IN KEEPING WITH THE QUESTION AND ANSWER PROCEDURE ESTABLISHED IN PARAGRAPH 9 OF PART 1 OF THE REFERENCED SPECIFICATIONS, USACSSEC SENT QUESTIONS AND ANSWERS NUMBERED 1 THROUGH 6 TO ALL OFFERORS AS AN ENCLOSURE TO A LETTER DATED SEPTEMBER 1, 1971. IN ANSWER TO QUESTION 1, WHICH HAD REQUESTED A COPY OF THE PROCEDURES FOR ACHIEVING EQUIPMENT QUALIFICATION, IT WAS STATED:

"THE GENERAL PROCEDURES FOR ACHIEVING EQUIPMENT QUALIFICATION ARE ATTACHED. BECAUSE OF THE DIFFERENT TECHNICAL APPROACHES TAKEN BY THE VARIOUS SUPPLIERS A SPECIFIC DETAILED SET OF PROCEDURES FOR THE TEST PORTION OF THE QUALIFICATION REVIEW DOES NOT EXIST. EACH TEST WILL BE FORMULATED IN COORDINATION WITH THE PARTICULAR SUPPLIER, AFTER A CAREFUL ANALYSIS OF THE DESIGN SPECIFICATION (OR EQUIVALENT), AND WILL BE DEPENDENT ON HIS DESIGN APPROACH. ***"

THE REFERENCED GENERAL PROCEDURES DOCUMENT WHICH WAS ATTACHED TO ANSWER NUMBER 1 WAS ENTITLED "ADP EQUIPMENT QUALIFICATION AND THE ARMY QUALIFIED EQUIPMENT LIST (QEL)" AND CARRIED THE DATE OF DECEMBER 15, 1967. PERTINENT PORTIONS OF THAT DOCUMENT PROVIDE:

"3. POLICIES

"A. GENERAL.

"(1) RFP'S ISSUED BY USACSEC NORMALLY CONTAIN THE GENERAL REQUIREMENT THAT 'PROPOSED EQUIPMENT MUST BE ON THE ARMY QUALIFIED EQUIPMENT LIST AT THE TIME THE PROPOSAL IS DUE.' THE PURPOSE OF THIS GENERAL REQUIREMENT IS TO PROVIDE ONE MEANS OF ASSURANCE THAT EQUIPMENT PROPOSED BY VENDORS IN RESPONSE TO THE RFP WILL PROVIDE THE CAPABILITIES AND PERFORMANCE CLAIMED BY THE VENDORS.

"(3) IN ORDER TO ACCOMPLISH QUALIFICATION BY A GIVEN PROPOSAL DUE DATE, THE REQUEST FOR QUALIFICATION, THE COMPLETED DATA COLLECTION FORMS, AND ALL VENDOR TECHNICAL LITERATURE FOR THE USACSEC TECHNICAL LIBRARY MUST BE SUBMITTED TO USACSEC AT LEAST TEN WORKING DAYS PRIOR TO PROPOSAL DUE DATE. IT IS ALSO EXPECTED THAT THE VENDOR WILL HAVE AVAILABLE FOR DEMONSTRATION PRODUCTION MODELS OF ALL THE DEVICES FOR WHICH QUALIFICATION IS REQUESTED.

"(6) AS A GENERAL POLICY, ONLY THOSE ADPE WHICH ARE NOW, OR HAVE PREVIOUSLY BEEN, IN A REGULAR LINE OF PRODUCTION, AND FOR WHICH AT LEAST ONE MODEL PRODUCED BY SAID PRODUCTION FACILITY IS OPERATIONAL, WILL BE CONSIDERED FOR QUALIFICATION.

"(8) ONLY USACSEC CAN DETERMINE WHEN A DEVICE IS QUALIFIED. FOR EXAMPLE, A VENDOR'S DETERMINATION THAT HIS PROPOSED DEVICE MEETS THE COMPATIBILITY CRITERIA FOR QUALIFICATION AND, THEREFORE, IS AUTOMATICALLY QUALIFIED WITHOUT NEED FOR A DEMONSTRATION, IS NOT ACCEPTABLE. AT ANY TIME, USACSEC MAY EXCLUDE ANY DEVICE FROM QUALIFICATION THROUGH COMPATIBILITY, IF IN ITS JUDGMENT A DEMONSTRATION IS NECESSARY TO PROVE SATISFACTORY OPERATION. FINAL DETERMINATION OF COMPATIBILITY RESTS WITH THE ARMY.

"4. PROCEDURES

"C. THE NORMAL ELEMENTS OF A QUALIFICATION REVIEW ARE:

"(1) EXAMINATION BY CSEC OF THE DATA COLLECTION FORMS AND TECHNICAL LITERATURE PROVIDED BY THE VENDOR.

"(2) TECHNICAL DISCUSSIONS BETWEEN ESAD AND VENDOR PERSONNEL.

"(3) DEMONSTRATION OF THE SYSTEM OR EQUIPMENT TO BE QUALIFIED.

"F.(3)(B) DEMONSTRATION MAY BE MADE AT ANY LOCATION TO WHICH THE VENDOR CAN ARRANGE ACCESS FOR CSEC PERSONNEL. ***"

IT IS REPORTED THAT ON SEPTEMBER 21, 1971, DATA RECALL DEMONSTRATED ITS EQUIPMENT AT THE STEELE SALES CORPORATION, CHICAGO, ILLINOIS, TO A REPRESENTATIVE OF USACSSEC, AND ON OCTOBER 1, 1971, CMI DEMONSTRATED ITS 128KB EXPANDED MEMORY SYSTEM TO A USACSSEC REPRESENTATIVE AT BUSINESS COMPUTER SERVICES, NEWTON, MASSACHUSETTS. BASED UPON CONSIDERATION OF ALL THE ELEMENTS OF USACSSEC'S "QUALIFICATION REVIEW" IT WAS DETERMINED THAT BOTH CMI AND DATA RECALL HAD SUCCESSFULLY COMPLETED SUCH REVIEW AND BOTH COMPANIES WERE PLACED ON ARMY'S QEL.

AFTER DETERMINING THAT CERTAIN PROPOSALS OF THOSE FIRMS LISTED ON THE QEL, INCLUDING THOSE OF DATA RECALL AND CMI, MET THE TECHNICAL REQUIREMENTS OF THE RFP, USACSSEC CONDUCTED A COST EVALUATION IN ACCORDANCE WITH THE CRITERIA SET FORTH IN SECTION D OF THE SOLICITATION. THE EVALUATION PROCESS DISCLOSED THAT THE OVERALL COSTS TO THE GOVERNMENT ASSOCIATED WITH THE CMI LEASE PROPOSAL WAS $1,268,771, WHEREAS THE OVERALL LEASE COSTS OF DATA RECALL WERE DETERMINED TO BE $1,704,491. IN THIS REGARD, IT IS REPORTED THAT THE OVERALL COST DIFFERENCE OF $435,720 THAT EXISTED BETWEEN THESE TWO OFFERS WAS MISTAKENLY REPORTED TO THE UNSUCCESSFUL OFFERORS AS $17,356. SUCH FIRMS WERE SUBSEQUENTLY NOTIFIED OF THE MISTAKE.

SHORTLY BEFORE CONTRACT AWARD, A SUCCESSFUL PERFORMANCE TEST OF CMI'S EXPANDED MEMORY SYSTEM WAS CONDUCTED BY USACSSEC AT FORT RILEY, KANSAS, IN ACCORDANCE WITH PARAGRAPH 7 OF PART III OF THE SPECIFICATIONS. A PREAWARD SURVEY WAS CONDUCTED OF CMI'S FACILITIES, WHICH SURVEY RECOMMENDED AWARD TO THAT FIRM. CONSEQUENTLY, CMI HAVING BEEN FOUND TECHNICALLY RESPONSIVE AND RESPONSIBLE, AND HAVING OFFERED THE LOWEST OVERALL COST, CONTRACT AWARD WAS MADE TO IT ON FEBRUARY 27, 1972.

YOUR PROTEST ASSERTS IT IS APPARENT, FROM THE VARIOUS REFERENCED ARMY DOCUMENTS, THAT FOR AN OFFEROR TO QUALIFY ITS PROPOSED EXPANSION MEMORY UNITS FOR INCLUSION ON THE ARMY'S QUALIFIED EQUIPMENT LIST BY OCTOBER 1, 1971, SUCH OFFEROR MUST HAVE HAD BY THAT TIME OPERATIONAL PRODUCTION MODELS MANUFACTURED "IN A REGULAR LINE OF PRODUCTION." BUTTRESSED BY SEVERAL AFFIDAVITS, YOU ALLEGE THAT CMI DID NOT, BY OCTOBER 1, 1971, HAVE ANY OPERATIONAL PRODUCTION MODELS OF ITS PROPOSED EXPANSION MEMORY UNIT, SINCE IT NEVER HAS HAD A REGULAR LINE OF PRODUCTION FOR SUCH UNITS. ACCORDINGLY, YOU ARGUE THAT CMI COULD NOT POSSIBLY HAVE PROPERLY QUALIFIED ITS UNITS FOR INCLUSION ON THE QEL, AND THEREFORE IT WAS NOT ELIGIBLE TO RECEIVE AWARD OF THE SUBJECT CONTRACT.

THIS BRIEF SUMMARY OF YOUR DETAILED PROTEST RAISES QUESTIONS OF FACT WHICH, THROUGH OUR PROCEDURES, MUST BE RESOLVED FROM THE WRITTEN RECORD SUBMITTED BY ALL PARTIES INVOLVED IN THE PROTEST. HOWEVER, BEFORE WE TURN TO OUR CONSIDERATION OF THIS FACTUAL ISSUE WE THINK IT IS APPROPRIATE TO OBSERVE THAT THE MAIN THRUST OF YOUR ARGUMENT HAS ITS BEGINNING AND END IN PARAGRAPH 3A(6) OF THE DECEMBER 15, 1967, QEL DOCUMENT, WHICH READS AS FOLLOWS:

"AS A GENERAL POLICY, ONLY THOSE ADPE WHICH ARE NOW, OR HAVE PREVIOUSLY BEEN, IN A REGULAR LINE OF PRODUCTION, AND FOR WHICH AT LEAST ONE MODEL PRODUCED BY SAID PRODUCTION FACILITY IS OPERATIONAL, WILL BE CONSIDERED FOR QUALIFICATION."

EVEN IF WE WERE TO ACCEPT YOUR CONTENTION CONCERNING THE QUALIFICATION PROVISIONS AS PROVIDING A DECISIVE FACTOR IN DETERMINING WHETHER CMI, OR ANY OTHER OFFEROR, MET THE QEL REQUIREMENTS, WE CANNOT AGREE WITH YOUR APPARENT INTERPRETATION THAT TO QUALIFY AS AN OPERATIONAL PRODUCTION UNIT IT MUST BE NECESSARY THAT SUCH UNITS HAVE BEEN INSTALLED (AS YOU SAY WAS THE CASE WITH DATA RECALL) WITH NUMEROUS COMMERCIAL CUSTOMERS. TO FOLLOW THIS REASONING TO ITS LOGICAL CONCLUSION WOULD, IN OUR VIEW, READ REQUIREMENTS INTO THE PROVISION ON WHICH YOU RELY THAT ARE NOT STATED THEREIN, AND WOULD TEND TO EXPAND THE LANGUAGE REQUIRING ONLY THAT ONE MODEL PRODUCED BY THE PRODUCTION FACILITY BE OPERATIONAL.

THOUGH YOU PRESS US TO CONCLUDE THAT CMI COULD NOT PROPERLY QUALIFY ITS PRODUCT, WE CANNOT ACCEPT YOUR VERSION OF THE FACTS OVER THAT OF THE ARMY'S UNLESS THERE ARE SUFFICIENT OBJECTIVE INDICATIONS THAT YOUR RECITAL OF THE FACTS IS CORRECT AND THAT OF THE ARMY'S IS FALSE. IT IS OUR OPINION, HOWEVER, THAT YOUR PROTEST IS NOT BASED UPON PROVEN FACTS, BUT RATHER UPON BELIEFS, VIEWS AND UNDERSTANDINGS OF VARIOUS AFFIANTS WHO APPARENTLY FORMED THEIR BELIEFS ON OBSERVATIONS AND STATEMENTS ATTRIBUTED TO OTHER SOURCES. EVEN THE AFFIDAVIT OF DONALD G. BUTLER REFERRING TO STATEMENTS ALLEGED TO HAVE BEEN MADE BY EMPLOYEES OF CMI, IS CONCLUSIONARY IN NATURE AND PRESENTS THE AFFIANT'S OPINION AS TO WHETHER CMI HAD A REGULAR LINE OF PRODUCTION.

THE ARMY, ON THE OTHER HAND, HAS UNEQUIVOCALLY STATED, AS HAS CMI, THAT CMI DID SUCCESSFULLY COMPLETE BY OCTOBER 1, 1971, ALL REQUIREMENTS FOR PLACEMENT ON THE QEL AND WAS SO LISTED ON THAT DATE. IN DIRECT RESPONSE TO YOUR ALLEGATIONS, ARMY HAS SPECIFICALLY INFORMED THIS OFFICE THAT THE LISTING "INCLUDED A FINDING THAT THE ADPE PROPOSED BY CMI WAS IN A REGULAR LINE OF PRODUCTION AND THAT AT LEAST ONE MODEL PRODUCED BY SAID PRODUCTION FACILITY WAS OPERATIONAL AS OF 1 OCTOBER 1971."

ALSO IN RESPONSE TO YOUR CONTENTIONS, CMI HAS STATED:

"PLEASE BE ADVISED THAT, AT THE TIME OF ARMY QUALIFICATION, CMI HAD, IN ADDITION TO THE UNIT DEMONSTRATED TO THE U.S. ARMY, OTHER PRODUCTION EXPANSION UNITS, SOME OF WHICH WERE COMPLETE, SOME UNDER TEST, AND OTHERS IN PROCESS AT THE CMI PLANT LOCATED AT 93 BORDER STREET, NEWTON, MASS. CMI CHOSE TO DEMONSTRATE ITS FIRST PRODUCTION UNIT AT BUSINESS COMPUTER SERVICES, INC. (BCS), 227 NEEDHAM STREET, NEWTON, MASS., BECAUSE BCS HAD A COMPLEMENT OF PERIPHERAL EQUIPMENT (TAPE DRIVES, DISC DRIVES, PRINTER, ETC.), WHICH WOULD PERMIT COMPREHENSIVE PROGRAMS TO BE DEMONSTRATED."

IT IS FURTHER STATED BY CMI:

"THE FIRST CMI ENGINEERING EXPANSION UNIT WAS TESTED IN JULY, 1971, AT THE OFFICES OF CMI. CMI'S FIRST PRODUCTION UNIT WAS INSTALLED IN AUGUST, 1971, AT BUSINESS COMPUTER SERVICES ('BCS'), 227 NEEDHAM STREET, NEWTON, MASSACHUSETTS. THIS EXPANSION MEMORY UNIT HAS NEVER BEEN REMOVED FROM BCS AND IS STILL IN OPERATION AT THIS TIME. THIS UNIT HAS ALWAYS BEEN CONSIDERED BY BOTH BCS AND CMI, AND HAS ALWAYS OPERATED AS, A 'PRODUCTION' UNIT. THESE FACTS, SUPPORTED BY THE SWORN STATEMENT OF CHARLES SILK, GENERAL MANAGER OF BCS (CMI EXHIBIT A) CLEARLY SHOWS THAT CIG'S ALLEGATIONS CONTAINED IN SECTION IIIB) OF THEIR PROTEST AND IN MR. CROUGH'S AFFIDAVIT (CIG EXHIBIT B) ARE FALSE AND MISLEADING.

"IT WAS THIS PRODUCTION UNIT, LOCATED AT BCS, THAT WAS PURSUANT TO THE REQUIREMENTS FOR HAVING A PRODUCT PLACED ON THE QUALIFIED EQUIPMENT LIST - FORMALLY TESTED AND QUALIFIED BY LT. RICHARD SILVA (FN2) OF THE U.S. ARMY'S COMPUTER SYSTEMS SUPPORT AND EVALUATION COMMAND (USACSSEC) AS OF OCTOBER 1, 1971.

FN2 "LT. SILVA PREVIOUSLY HAD MADE AN ON-SITE SURVEY OF CMI'S ENGINEERING AND MANUFACTURING CAPABILITIES AS EARLY AS JULY, 1971."

BY WAY OF FURTHER EXPLANATION, CMI STATES:

"SINCE 1969, CMI HAS BEEN DELIVERING MEMORY SYSTEMS USING THE SAME BASIC MEMORY UNIT AS THE ONE CALLED FOR UNDER THE CONTRACT. CMI HAS BEEN DELIVERING SYSTEMS FOR USE AS ADD-ON MEMORIES TO IBM SYSTEM/360 MODEL 30 COMPUTERS SINCE THE FIRST QUARTER OF 1971. THE DIFFERENCE BETWEEN THE REGULAR UNIT AND AN 'EXPANSION MEMORY UNIT' IS PRINCIPALLY THAT AN EXPANSION MEMORY UNIT HAS, IN ADDITION TO THE BASIC EQUIPMENT USED TO INCREASE CAPACITY UP TO IBM'S LIMITS, A SEPARATE PRINTED CIRCUIT BOARD CONTAINING ELECTRICAL COMPONENTS INSTALLED WITHIN THE 360 COMPUTER.

"CMI'S PRODUCTION LINES ARE ONES WHICH PERMIT ITS MEMORY SYSTEMS TO BE CONFIGURED FOR A VARIETY OF MODELS. THE SYSTEMS CALLED FOR BY THE ARMY CONTRACT CONSIST OF SOME OF THE MANY MODELS THAT CAN BE PRODUCED BY SUCH PRODUCTION LINES.

"CMI'S FIRST DELIVERY OF A PRODUCTION EXPANSION MEMORY UNIT WAS TO BUSINESS COMPUTER SERVICES, INC. (BCS).

"THE EXPANSION MEMORY UNIT DELIVERED BY CMI TO BCS WAS PRODUCED IN EXACTLY THE SAME WAY AS ARE UNITS PRESENTLY BEING DELIVERED TO THE ARMY, NAVY, AND COMMERCIAL CUSTOMERS."

CONCERNING YOUR ARGUMENTS TO THE EFFECT THAT ARMY MUST PRODUCE SUBSTANTIAL EVIDENCE FULLY SUPPORTING ITS FINDINGS BECAUSE OF THE ALLEGATIONS WHICH YOU HAVE MADE, AND UNLESS SUCH DOCUMENTED EVIDENCE IS PRODUCED ARMY'S ACTIONS IN QUALIFYING CMI'S PRODUCT MUST BE CONSIDERED ARBITRARY, IN KECO INDUSTRIES, INC. V. UNITED STATES, 192 CT. CL. 773, 784 (1970), THE COURT EMPHASIZED THE STANDARD AS FOLLOWS: "IT MUST BE POINTED OUT THAT THE STANDARD OF PROOF TO BE APPLIED IN CASES WHERE ARBITRARY AND CAPRICIOUS ACTION IS CHARGED SHOULD BE A HIGH ONE. FINAL DECISIONS SHOULD BE BASED ON THE PARTICULAR CIRCUMSTANCES OF EACH CASE. IT WILL REMAIN FOR PLAINTIFF TO MEET THIS HIGH STANDARD BY PROVING TO THE COMMISSIONER THAT SUCH ARBITRARY AND CAPRICIOUS ACTION AS ALLEGED DID IN FACT EXIST."

WE ARE UNABLE TO CONCLUDE ON THE BASIS OF THE RECORD THAT THE QUALIFICATION OF CMI'S MODEL WAS ARBITRARY UNDER THE STANDARD REQUIRED IN THE KECO CASE. SEE B-172061, FEBRUARY 22, 1972. FOR THESE REASONS, WE FIND NO LEGAL BASIS TO HOLD THAT CMI'S OFFER WAS NONRESPONSIVE OR OTHERWISE NOT FOR CONSIDERATION IN MAKING AN AWARD UNDER THE SOLICITATION. ACCORDINGLY, YOUR PROTEST IS DENIED.