B-181171, OCT 9, 1974

B-181171: Oct 9, 1974

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EVEN IF GAO CONSIDERS PROTESTER'S LETTER TO AGENCY PRIOR TO CLOSING DATE OF RFP SEEKING CLARIFICATION OF EQUIVALENCY CRITERIA IN RFP AS PROTEST TO AGENCY THIS PORTION OF PROTEST FILED WITH GAO MORE THAN TWO MONTHS AFTER CLOSING DATE FOR RECEIPT OF PROPOSALS IS UNTIMELY UNDER SECTION 20.2(A) OF GAO INTERIM BID PROTEST PROCEDURES AND STANDARDS. PORTION OF PROTEST CONCERNING EVALUATION OF MAINTENANCE CHARGES OFFERED BY SUCCESSFUL OFFEROR IS TIMELY AND FOR CONSIDERATION ON ITS MERITS SINCE PROTEST WAS FILED WITHIN FIVE DAYS OF PROTESTER'S RECEIPT OF COPY OF CONTRACT WHICH REVEALED BASIS FOR PROTEST. 2. ALTHOUGH THERE IS NO ASSURANCE THAT MAINTENANCE CALLS OUTSIDE MAINTENANCE PERIOD SPECIFIED IN RFP WOULD BE REQUIRED.

B-181171, OCT 9, 1974

1. EVEN IF GAO CONSIDERS PROTESTER'S LETTER TO AGENCY PRIOR TO CLOSING DATE OF RFP SEEKING CLARIFICATION OF EQUIVALENCY CRITERIA IN RFP AS PROTEST TO AGENCY THIS PORTION OF PROTEST FILED WITH GAO MORE THAN TWO MONTHS AFTER CLOSING DATE FOR RECEIPT OF PROPOSALS IS UNTIMELY UNDER SECTION 20.2(A) OF GAO INTERIM BID PROTEST PROCEDURES AND STANDARDS. PORTION OF PROTEST CONCERNING EVALUATION OF MAINTENANCE CHARGES OFFERED BY SUCCESSFUL OFFEROR IS TIMELY AND FOR CONSIDERATION ON ITS MERITS SINCE PROTEST WAS FILED WITHIN FIVE DAYS OF PROTESTER'S RECEIPT OF COPY OF CONTRACT WHICH REVEALED BASIS FOR PROTEST. 2. ALTHOUGH THERE IS NO ASSURANCE THAT MAINTENANCE CALLS OUTSIDE MAINTENANCE PERIOD SPECIFIED IN RFP WOULD BE REQUIRED, FAILURE OF AGENCY TO INCLUDE REASONABLE ESTIMATE OF NUMBER OF CALLS WHICH MAY BE REQUESTED TO EVALUATE CHARGES FOR SUCH CALLS WAS IMPROPER. 47 COMP. GEN. 272 (1967); B-172627, MAY 28, 1971. HOWEVER, SUCH DEFECT DID NOT AFFECT AWARD SELECTION SINCE RFP ADVISED OFFERORS THAT SUCH CHARGES WOULD NOT BE EVALUATED AND IF SUCH CHARGES HAD BEEN EVALUATED ON BASIS URGED BY PROTESTER RELATIVE POSITION OF OFFERORS WOULD NOT HAVE BEEN ALTERED.

SPERRY RAND CORPORATION, SPERRY UNIVAC DIVISION:

ON FEBRUARY 4, 1974, REQUEST FOR PROPOSALS (RFP) CDPA-74-17 WAS ISSUED BY THE GENERAL SERVICES ADMINISTRATION (GSA) FOR THE PROCUREMENT OF A DATA PROCESSING SYSTEM AND RELATED SUPPORT SERVICES ON BEHALF OF THE FEDERAL COMMUNICATIONS COMMISSION. THE SOLICITATION SPECIFIED THAT THE EQUIPMENT MUST BE EQUIVALENT IN PERFORMANCE TO THE UNIVAC 1106 SYSTEM.

ON THE CLOSING DATE OF MARCH 4, 1974, TWO PROPOSALS WERE RECEIVED; ONE FROM SPERRY UNIVAC COMPUTER SYSTEMS (UNIVAC) OFFERING ITS UNIVAC 1106 SYSTEM AND THE OTHER FROM HONEYWELL INFORMATION SYSTEMS, INC. (HONEYWELL), OFFERING ITS MODEL CS6023.

THE PROPOSALS WERE EVALUATED AND IT WAS DETERMINED THAT HONEYWELL'S LEASE OFFER TOTALED $507,819 ACTUAL EXPENDED DOLLARS OVER THE 27-MONTH SYSTEM LIFE, WHILE THE UNIVAC LEASE OFFER TOTALED $547,738 ACTUAL EXPENDED DOLLARS FOR THE SAME SYSTEM LIFE. ON APRIL 22, 1974, THE CONTRACT WAS AWARDED TO HONEYWELL ON THE BASIS THAT ITS OFFER CONSTITUTED THE LEAST COST METHOD OF ACQUISITION OVER THE 24-MONTH SYSTEM LIFE.

BY TELEFAX DATED MAY 1, 1974, UNIVAC PROTESTED TO OUR OFFICE CONTENDING THAT THE MAINTENANCE PORTION OF HONEYWELL'S PROPOSAL HAD BEEN IMPROPERLY EVALUATED AND THAT THE CRITERIA LISTED IN THE SOLICITATION WERE INADEQUATE TO DETERMINE THE EQUIVALENCY OF THE HONEYWELL SYSTEM. IN THIS CONNECTION, UNIVAC HAS CONTENDED THAT WITHOUT THE PERFORMANCE OF A BENCHMARK OR SOME LIVE TEST DEMONSTRATION THE HONEYWELL SYSTEM CAN NOT BE PROVED EQUIVALENT TO THE DEFINED 1106 SYSTEM.

THE AGENCY CONTENDS THAT UNIVAC'S PROTEST IS UNTIMELY UNDER THAT PORTION OF SECTION 20.2(A) OF OUR INTERIM BID PROTEST PROCEDURES AND STANDARDS THAT REQUIRES A PROTEST TO BE FILED WITHIN FIVE DAYS AFTER THE BASIS OF THE PROTEST BECAME KNOWN OR SHOULD HAVE BECOME KNOWN TO THE PROTESTER. GSA ARGUES, CITING LETTERS FROM UNIVAC TO THE CONTRACTING OFFICER DATED FEBRUARY 7, MARCH 8 AND APRIL 3, 1974, THAT UNIVAC QUESTIONED THE EQUIVALENCY PROVISIONS OF THE RFP AND THE PROPOSED METHOD OF EVALUATING MAINTENANCE CHARGES PRIOR TO THE APRIL 22 AWARD TO HONEYWELL. SINCE UNIVAC'S PROTEST WAS NOT FILED IN OUR OFFICE UNTIL MAY 1, THE AGENCY CONCLUDES THAT THE UNIVAC PROTEST WAS FILED AFTER THE ALLOTED FIVE DAYS.

IT IS OUR VIEW THAT THE PORTION OF THE UNIVAC PROTEST CONCERNING THE EQUIVALENCY CRITERIA CONTAINED IN THE RFP WAS NOT TIMELY FILED IN OUR OFFICE. SECTION 20.2(A) OF OUR PROCEDURES PROVIDES THAT PROTESTS BASED UPON ALLEGED IMPROPRIETIES IN ANY TYPE OF SOLICITATION SHALL BE FILED PRIOR TO BID OPENING OR THE CLOSING DATE FOR RECEIPT OF PROPOSALS. ALTHOUGH UNIVAC PROTESTED THE ADEQUACY OF THE EQUIVALENCY CRITERIA TO THE AGENCY PRIOR TO THE CLOSING DATE FOR RECEIPT OF PROPOSALS, ITS PROTEST WAS NOT FILED IN OUR OFFICE UNTIL MAY 1, 1974, NEARLY TWO MONTHS AFTER THE CLOSING DATE FOR RECEIPT OF PROPOSALS. SECTION 20.2(A) OF OUR REGULATIONS PROVIDES IN THIS REGARD THAT IF THE PROTEST IS INITIALLY FILED WITH THE AGENCY ANY SUBSEQUENT PROTEST TO THIS OFFICE MUST BE FILED WITHIN FIVE DAYS OF NOTIFICATION OF ADVERSE AGENCY ACTION. SINCE THE AGENCY DID NOT AMEND THE EQUIVALENCY CRITERIA AS REQUESTED BY UNIVAC PRIOR TO THE RECEIPT OF PROPOSALS ON MARCH 4, ITS PROTEST TO OUR OFFICE ALMOST TWO MONTHS THEREAFTER WAS CLEARLY MORE THAN FIVE DAYS AFTER NOTICE OF ADVERSE AGENCY ACTION AND WAS THEREFORE UNTIMELY AND NOT FOR CONSIDERATION ON THE MERITS.

HOWEVER, SINCE UNIVAC WAS NOT PROVIDED A COPY OF THE HONEYWELL CONTRACT, WHICH CONTAINS A PROVISION IMPOSING A MAINTENANCE SURCHARGE ON CERTAIN MAINTENANCE CALLS, UNTIL APRIL 24, THAT PORTION OF ITS PROTEST WAS TIMELY FILED ON MAY 1.

UNIVAC URGES THAT THE AGENCY FAILED TO EVALUATE HONEYWELL'S COST PROPOSAL IN ACCORDANCE WITH THE PROVISION IN THE RFP WHICH STATES THAT ALL COST INFORMATION SHOULD BE BASED "ON THE GOVERNMENT'S REQUIREMENT TO USE THE EQUIPMENT 24 HOURS PER DAY, 7 DAYS PER WEEK DURING A SYSTEM LIFE OF 24 MONTHS EXCEPT FOR PREVENTIVE AND REMEDIAL MAINTENANCE." UNIVAC'S POSITION IS BASED ON THE FACT THAT THE AGENCY DID NOT EVALUATE A SURCHARGE INCLUDED BY HONEYWELL FOR MAINTENANCE CALLS REQUESTED BY THE USING AGENCY OUTSIDE THE PRINCIPAL MAINTENANCE PERIOD (8 HOURS BETWEEN 8 A.M. AND 5 P.M.) SPECIFIED IN THE RFP. OUR ATTENTION IS DIRECTED TO PARAGRAPH 14.4.2 OF THE HONEYWELL PROPOSAL WHICH PROVIDES, IN SUBSTANCE, THAT SHOULD THE USING AGENCY EXTEND THE SPECIFIED MAINTENANCE PERIOD THE FOLLOWING SURCHARGES ARE EFFECTIVE:

MAXIMUM MONTHLY SURCHARGE

CONSECUTIVE HOURS (BASED ON BASIC

DAYS (PER DAY) MONTHLY MAINT. CHARGE)

PRINCIPAL PERIOD OF 9 HOURS BETWEEN 7 A.M. NO SURCHARGE

MAINTENANCE AND 6 P.M.

MONDAYS THROUGH 9 HOURS, ANY OF WHICH 10%

FRIDAYS EXCLUDING FALL OUTSIDE 7 A.M.

HOLIDAYS AND 6 P.M.

16 HOURS 30%

24 HOURS 50%

ANY OR ALL SATURDAYS 9 HOURS 10%

OR SUNDAYS DURING 24 HOURS 20%

THE MONTH

ANY OR ALL SATURDAYS 9 HOURS 20%

AND SUNDAYS DURING 24 HOURS 40%

THE MONTH

ACCORDING TO THE FOLLOWING CALCULATIONS OFFERED BY UNIVAC, THE EVALUATION OF THIS SURCHARGE WOULD HAVE MADE UNIVAC THE LOW OFFEROR:

"UNDER PARAGRAPH 14.4.2 WHICH IS ENTITLED SCHEDULED USE AND MAINTENANCE COVERAGE, (SEE ATTACHMENT NO. 4) A 90% SURCHARGE PLUS WHATEVER THEY WOULD CHARGE FOR HOLIDAYS IS APPLICABLE (50% FOR 24 HOURS A DAY AND 40% FOR 24 HOURS A DAY, SATURDAYS AND SUNDAYS DURING THE MONTH). THIS 90% SURCHARGE IS BASED ON BASIC MONTHLY MAINTENANCE CHARGES AS STATED IN THE PARAGRAPH. THE SURCHARGE FOR 24 HOURS A DAY, 7 DAYS A WEEK FOR TWENTY-FOUR MONTHS AMOUNTS TO ($3750 X 90% X MONTHS) $81,000, *** THE $81,000 HAS NOT BEEN CONSIDERED IN THE $507,819 AMOUNT OF THE AWARD ***."

THE AGENCY DENIES THAT THE SURCHARGE SHOULD HAVE BEEN INCLUDED IN THE EVALUATION AND MAINTAINS THAT EVEN IF INCLUDED IT WOULD NOT HAVE CHANGED THE RELATIVE STANDING OF THE OFFERORS. IT IS GSA'S POSITION THAT ANY CHARGES FOR MAINTENANCE CALLS MADE OUTSIDE THE SPECIFIED PRINCIPAL MAINTENANCE PERIOD ARE SPECULATIVE AND WERE NOT INCLUDED IN THE EVALUATION BECAUSE THERE IS NO DEFINITIVE WAY OF ANTICIPATING THE NUMBER OF SUCH MAINTENANCE CALLS THE GOVERNMENT MIGHT PLACE. GSA INSISTS THAT UNIVAC'S CONTRARY POSITION IS BASED ON THE ERRONEOUS PREMISE THAT MAINTENANCE COVERAGE IS REQUIRED UNDER THE RFP ON A 24 HOURS PER DAY, 7 DAYS PER WEEK BASIS THROUGHOUT THE ENTIRE 24-MONTH SYSTEM LIFE. IN THIS REGARD, THE AGENCY POINTS OUT THAT THERE IS NO PROVISION IN THE RFP WHICH SPECIFICALLY REQUIRES UNLIMITED MAINTENANCE AND CONTENDS THAT UNLIMITED USE OF EQUIPMENT DOES NOT ALWAYS NECESSITATE UNLIMITED MAINTENANCE CALLS. SUPPORT OF THIS POSITION GSA CITES SECTION E, PARAGRAPH 14.5 OF THE RFP WHICH PROVIDES IN PART "SHOULD THE GOVERNMENT REQUIRE MAINTENANCE SERVICE OUTSIDE THE DESIGNATED PRINCIPAL PERIOD OF MAINTENANCE OR EXTENSION THEREOF ON AN ON-CALL BASIS, CHARGES FOR SUCH ADDITIONAL MAINTENANCE SERVICE SHALL BE AT AN HOURLY RATE OF ."

WE DO NOT BELIEVE THAT THE GENERAL INSTRUCTION CONTAINED IN THE RFP TO THE EFFECT THAT OFFERORS SHOULD SUBMIT COST DATA BASED ON A 24 HOURS PER DAY, 7 DAYS PER WEEK USE PERIOD OBLIGATED THE AGENCY TO EVALUATE ALL MAINTENANCE CHARGES ON SUCH A BASIS. IT IS CLEAR FROM SECTION A, PARAGRAPH 5, EXHIBIT I, SECTIONS 2C(2) AND 2G(2) OF THE RFP THAT MAINTENANCE CHARGES TO BE INCLUDED IN THE OFFEROR'S COST TABLES FOR EVALUATION WERE TO BE ONLY THE CHARGES FOR MAINTENANCE WITHIN THE PRINCIPAL MAINTENANCE PERIOD. NOR ARE WE ABLE TO ACCEPT UNIVAC'S CONTENTION THAT BY FAILING TO RESPOND TO UNIVAC'S APRIL 3 LETTER, WHICH STATED ITS VIEW THAT PROPOSALS SHOULD BE EVALUATED ON THE BASIS OF 24 HOURS PER DAY, 7 DAYS PER WEEK USE, GSA "ASSURED" UNIVAC THAT ANY CHARGES FOR MAINTENANCE COVERAGE OUTSIDE THE SPECIFIED PRINCIPAL MAINTENANCE PERIOD WOULD BE EVALUATED.

IT IS OUR VIEW THAT THE RFP TAKEN AS A WHOLE SUPPORTS THE AGENCY'S ARGUMENT THAT ALTHOUGH ON-CALL MAINTENANCE OUTSIDE THE SPECIFIED PERIOD WAS REQUIRED TO BE AVAILABLE TO THE USING AGENCY AT SPECIFIED HOURLY RATES THERE WAS NO ASSURANCE THAT ANY SUCH MAINTENANCE CALLS WOULD ACTUALLY BE REQUIRED. IT FOLLOWS, THEREFORE, THAT THE MAXIMUM SURCHARGE OF 90 PERCENT CONTAINED IN THE HONEYWELL PROPOSAL WOULD ONLY APPLY IN THE EVENT THAT THE USING AGENCY PLACED A SUFFICIENT NUMBER OF MAINTENANCE CALLS OUTSIDE THE SPECIFIED PERIOD. ALTHOUGH THERE IS NO ASSURANCE IN THE INSTANT CASE THAT ANY MAINTENANCE CALLS OUTSIDE THE SPECIFIED PERIOD WILL BE REQUESTED, THE AGENCY REQUIRED OFFERORS TO SUBMIT HOURLY RATES APPLICABLE TO SUCH CALLS. IT IS OUR VIEW THAT WHEN OFFERORS ARE REQUIRED TO INCLUDE, AS A PORTION OF THEIR OFFERS, A COMMITMENT TO PROVIDE SERVICES AT A SPECIFIED CHARGE THE AGENCY IS OBLIGATED TO ATTEMPT TO DETERMINE THE IMPACT OF SUCH CHARGES ON THE TOTAL PRICES OFFERED. WE DO NOT FEEL THAT THE LACK OF A DEFINITIVE METHOD OF ANTICIPATING THE NUMBER OF MAINTENANCE CALLS THAT MIGHT BE PLACED PROHIBITS THE EVALUATION OF CHARGES FOR SUCH CALLS. WE HAVE HELD IN SIMILAR SITUATIONS THAT ALL THAT IS REQUIRED FOR THE EVALUATION OF SUCH A FACTOR IS A REASONABLE ESTIMATE OF THE NUMBER OF CALLS WHICH MAY BE EXPECTED. 47 COMP. GEN. 272 (1967), B-172627, MAY 28, 1971. ACCORDINGLY, IT IS OUR VIEW THAT GSA ACTED IMPROPERLY BY FAILING TO INCLUDE IN THE EVALUATION THE CHARGES FOR ON-CALL MAINTENANCE OUTSIDE THE SPECIFIED PERIOD. HOWEVER, WE DO NOT BELIEVE THAT THIS DEFECT AFFECTS THE AWARD SELECTION SINCE THE RFP INFORMED BOTH OFFERORS THAT THE SUBJECT MAINTENANCE CHARGES WOULD NOT BE EVALUATED AND, AS EXPLAINED BELOW, THE EVALUATION OF THESE CHARGES WOULD NOT HAVE CHANGED THE RELATIVE STANDING OF THE OFFERORS.

IN THIS CONNECTION GSA DISPUTES UNIVAC'S PREMISE THAT HAD HONEYWELL'S SCHEDULE OF MAINTENANCE CHARGES BEEN EVALUATED ITS OFFER WOULD HAVE INCREASED BY APPROXIMATELY $81,000, THEREBY MAKING UNIVAC THE LOW OFFEROR. THE AGENCY'S POSITION IN THIS REGARD IS AS FOLLOWS:

"THE SCHEDULE OF MAINTENANCE CHARGES CONTAINED IN PARAGRAPH 14.4.2 OF THE CONTRACT PROVIDES FOR AN OPTIONAL SIXTEEN CONSECUTIVE HOURS OF MAINTENANCE COVERAGE FOR A SURCHARGE OF 30%. THE MOST REALISTIC SITUATION THAT COULD OCCUR IS THAT THE HOURLY PER CALL MAINTENANCE CHARGES WOULD EXCEED THE 30% SURCHARGE RATE AND THEREFORE IT WOULD BE ECONOMICALLY ADVANTAGEOUS FOR THE GOVERNMENT TO SCHEDULE SIXTEEN HOURS OF CONSECUTIVE MAINTENANCE COVERAGE. IT IS EXTREMELY UNLIKELY THAT THE GOVERNMENT WOULD PLACE ENOUGH SERVICE CALLS OUTSIDE THE SIXTEEN HOUR PERIOD TO WARRANT TWENTY-FOUR HOURS OF COVERAGE AT THE 50% SURCHARGE RATE. ONCE THE SIXTEEN HOUR PERIOD WAS SELECTED, MOST SERVICE REQUIRED OUTSIDE THAT BASIC PERIOD WOULD BE DEFERRED UNTIL THE BEGINNING OF THE NEXT SIXTEEN HOUR PERIOD OF SCHEDULED MAINTENANCE. THE PER CALL MAINTENANCE RATES FOR UNIVAC AND HONEYWELL ARE $48 PER HOUR AND $61 PER HOUR RESPECTIVELY. APPLYING THESE RATES TO THE PRACTICAL SITUATION ABOVE, THE DIFFERENCE IN MAINTENANCE COSTS BETWEEN THE ALTERNATE SOURCES WOULD BE $260 PER MONTH; AN INCREASE OF $6,240 TO THE CONTRACT PRICE WHICH WOULD NOT REVERSE THE PRICE POSITION OF THE OFFERORS. THE BASIC MONTHLY MAINTENANCE CHARGE FOR HONEYWELL IS $3,750; 30% TO $3,750 IS $1,125; 20 HOURS OF PER CALL MAINTENANCE AT $61 PER HOUR IS $1,220; THE EQUIVALENT CHARGE FOR 20 HOURS OF PER CALL MAINTENANCE AT $48 PER HOUR FROM UNIVAC IS $960; THE DIFFERENCE OF $260 PER MONTH OVER 24 MONTHS IS $6,240.

"WHEN CONSIDERING THE EXTREME, THAT IS, THE UNLIKELY APPLICATION OF THE 90% SURCHARGE, THE GOVERNMENT WOULD REQUIRE FIFTY-SIX HOURS OF PER CALL MAINTENANCE TO REACH THE 90% SURCHARGE CATEGORY. AGAIN THE DIFFERENCE IN MAINTENANCE CHARGES BETWEEN UNIVAC AT $48 PER HOUR AND HONEYWELL AT $61 PER HOUR IS $728 PER MONTH OR AN INCREASED CONTRACT PRICE OF $17,472 OVER THE 24 MONTH SYSTEM LIFE, WHICH WOULD NOT REVERSE THE PRICE POSITIONS OF THE OFFERORS."

ALTHOUGH UNIVAC HAS OFFERED NO SPECIFIC REBUTTAL TO GSA'S EXPLANATION, IT MAKES THE POINT THAT IN OTHER CONTRACTS CONTAINING SIMILAR SURCHARGE PROVISIONS HONEYWELL INVOKED THE SURCHARGE WHENEVER MAINTENANCE CALLS WERE MADE OUTSIDE THE SPECIFIED PERIOD. IN GSA'S VIEW THE SURCHARGE IS NOT TO BE INVOKED UNTIL THE PER CALL MAINTENANCE CHARGES WOULD EXCEED THE AMOUNT OF THE SURCHARGE. IN THIS CONNECTION WE HAVE, AS REQUESTED BY UNIVAC, OBTAINED A COPY OF A LETTER DATED MAY 30, 1974, FROM HONEYWELL TO GSA CONCERNING THAT FIRM'S INTERPRETATION OF THE DISPUTED SURCHARGE PROVISION. THIS INTERPRETATION IS SIMILAR TO THAT GSA USED IN ITS ABOVE- CITED EXPLANATION.

EVEN IF WE ACCEPT UNIVAC'S POSITION THAT THE PROPER EVALUATION OF THE HONEYWELL PROPOSAL WOULD ADD $81,000 TO ITS COSTS, THE RELATIVE POSITION OF THE OFFERORS IS NOT ALTERED. AS ILLUSTRATED IN THE LAST PARAGRAPH OF GSA'S EXPLANATION, UNIVAC IN ITS CALCULATION ASSUMES THE MAXIMUM NUMBER OF MAINTENANCE CALLS OUTSIDE THE SPECIFIED PERIOD FOR HONEYWELL AND NO SUCH CALLS FOR UNIVAC. WHEN THE MAINTENACE COSTS OF BOTH OFFERORS ARE EVALUATED ON AN EQUAL BASIS THE GSA REPORT SHOWS THAT THE COST OF BOTH PROPOSALS INCREASES RESULTING IN ONLY A $17,472 INCREASE IN THE COST OF THE HONEYWELL PROPOSAL AS COMPARED TO THE REEVALUATED UNIVAC PROPOSAL AND HONEYWELL IS STILL LOW BY ABOUT $23,000. ACCORDINGLY, THE PROTEST IS DENIED.