B-181956(1), MAY 13, 1975

B-181956(1): May 13, 1975

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DECISION UPHOLDING REFUSAL OF GENERAL SERVICES ADMINISTRATION (GSA) TO CONSIDER PROPOSAL OF THIRD PARTY SUPPLIER FOR AUTOMATIC DATA PROCESSING (ADP) SCHEDULE CONTRACT IS AFFIRMED SINCE. IT CONTINUES TO APPEAR THAT PROTESTER WAS NOT UNDULY PREJUDICED BY FAILURE OF SOLICITATION TO WARN THAT THIRD PARTY FIRMS WOULD NOT BE CONSIDERED. ALTHOUGH GSA'S REFUSAL TO CONSIDER PROPOSAL OF THIRD PARTY SUPPLIER OF ADP EQUIPMENT IS NOT LEGALLY OBJECTIONABLE. IT IS BEING SUGGESTED THAT GSA CONSIDER REQUIRING SYNOPSIZING OF ADP REQUIREMENTS IN COMMERCE BUSINESS DAILY PRIOR TO PLACEMENT OF ADP SCHEDULE ORDERS SO THAT THIRD PARTY FIRMS WILL HAVE OPPORTUNITY TO DEMONSTRATE THEY CAN SATISFY AGENCY NEEDS. COMDISCO CLAIMS THAT OUR DECISION WAS PREDICATED ON FACTUAL ERRORS AND A LACK OF UNDERSTANDING OF "THE TOTAL SCHEDULE PROBLEM.".

B-181956(1), MAY 13, 1975

1. DECISION UPHOLDING REFUSAL OF GENERAL SERVICES ADMINISTRATION (GSA) TO CONSIDER PROPOSAL OF THIRD PARTY SUPPLIER FOR AUTOMATIC DATA PROCESSING (ADP) SCHEDULE CONTRACT IS AFFIRMED SINCE, UPON RECONSIDERATION, IT CONTINUES TO APPEAR THAT PROTESTER WAS NOT UNDULY PREJUDICED BY FAILURE OF SOLICITATION TO WARN THAT THIRD PARTY FIRMS WOULD NOT BE CONSIDERED. HOWEVER, IN VIEW OF DYNAMIC ADP MARKET, GSA'S RESTRICTED ADP SCHEDULE PROGRAM MAY NOT, UNDER FUTURE CONDITIONS, BE REGARDED AS IN THE BEST INTERESTS OF THE GOVERNMENT. 2. ALTHOUGH GSA'S REFUSAL TO CONSIDER PROPOSAL OF THIRD PARTY SUPPLIER OF ADP EQUIPMENT IS NOT LEGALLY OBJECTIONABLE, IT IS BEING SUGGESTED THAT GSA CONSIDER REQUIRING SYNOPSIZING OF ADP REQUIREMENTS IN COMMERCE BUSINESS DAILY PRIOR TO PLACEMENT OF ADP SCHEDULE ORDERS SO THAT THIRD PARTY FIRMS WILL HAVE OPPORTUNITY TO DEMONSTRATE THEY CAN SATISFY AGENCY NEEDS.

COMDISCO, INC.:

COMDISCO, INC. HAS REQUESTED RECONSIDERATION OF OUR DECISION B 181956, FEBRUARY 13, 1975, IN WHICH WE UPHELD THE REFUSAL OF THE GENERAL SERVICES ADMINISTRATION (GSA) TO CONSIDER A PROPOSAL FROM COMDISCO FOR AN AUTOMATIC DATA PROCESSING (ADP) SCHEDULE CONTRACT FOR FURNISHING IBM 360 EQUIPMENT. COMDISCO CLAIMS THAT OUR DECISION WAS PREDICATED ON FACTUAL ERRORS AND A LACK OF UNDERSTANDING OF "THE TOTAL SCHEDULE PROBLEM."

IN OUR DECISION, WE REVIEWED THE PROPRIETY OF GSA'S DETERMINATION THAT ADP SCHEDULE CONTRACTING WITH THIRD PARTY SUPPLIERS SUCH AS COMDISCO WAS NOT IN THE GOVERNMENT'S BEST INTERESTS. WE CONCLUDED THAT GSA'S REFUSAL TO CONSIDER THIRD PARTY SUPPLIERS WAS CONSISTENT WITH ITS STATUTORY AUTHORITY AND NOT CONTRARY TO LAW SINCE BY REGULATION ADP EQUIPMENT COULD BE PROCURED FROM THE SCHEDULE CONTRACTOR ONLY IF THE EQUIPMENT COULD NOT BE OBTAINED THROUGH COMPETITIVE PROCESSES IN WHICH THIRD PARTY FIRMS PARTICIPATED. WE EXPRESSED CONCERN OVER THE SOLICITATION'S FAILURE TO INDICATE THAT AWARD WOULD NOT BE MADE TO THIRD PARTY MARKET FIRMS, BUT NOTED THAT COMDISCO WAS NOT UNDULY PREJUDICED BY THE OMISSION SINCE IT HAD NOT OFFERED TO FURNISH THE COMPLETE COMPLEMENT OF EQUIPMENT AND SERVICES DESIRED AND HAD OFFERED ONLY USED EQUIPMENT FOR PURCHASE INSTEAD OF THE NEW EQUIPMENT REQUIRED BY THE SOLICITATION. WE ALSO ACCEPTED GSA'S STATEMENT THAT SCHEDULE CONTRACTING WITH THE THIRD PARTY MARKET WOULD INVOLVE BURDENSOME ADMINISTRATIVE PROBLEMS.

IN ITS REQUEST FOR RECONSIDERATION, COMDISCO CLAIMS THAT NO OFFEROR COULD HAVE OFFERED UNUSED IBM 360 EQUIPMENT AND THAT ONLY USED EQUIPMENT WILL BE FURNISHED BY IBM UNDER THE SCHEDULE. COMDISCO FURTHER CLAIMS THAT THE SOLICITATION DID NOT REQUIRE OFFERS ON ALL ITEMS, AND THAT GSA WOULD NOT HAVE BEEN ADMINISTRATIVELY BURDENED BY CONSIDERING THE COMDISCO PROPOSAL.

WITH REGARD TO COMDISCO'S FIRST POINT, WE UNDERSTAND THAT IBM NO LONGER MANUFACTURES THE 360 LINE OF EQUIPMENT, ALTHOUGH WE ALSO UNDERSTAND THAT IBM REFURBISHES ANY 360 EQUIPMENT IT SELLS TO THE GOVERNMENT AND PROVIDES NEW EQUIPMENT WARRANTIES WITH IT, SOMETHING NOT NORMALLY DONE BY THIRD PARTY SUPPLIERS. HOWEVER, SINCE THE SCHEDULE PERMITS DIRECT PURCHASE ONLY OF NEW EQUIPMENT, WE ARE INFORMED BY GSA THAT ANY 360 EQUIPMENT ACQUIRED BY THE GOVERNMENT UNDER THE SCHEDULE IS ON A RENTAL BASIS INITIALLY BUT MAY BE SUBJECT TO THE SUBSEQUENT EXERCISE OF A PURCHASE OPTION WHEN IT IS IN THE GOVERNMENT'S INTEREST TO CONVERT A RENTAL ARRANGEMENT TO GOVERNMENT OWNERSHIP.

ALTHOUGH IT APPEARS THAT GSA WAS NOT PRECLUDED FROM AWARDING A SCHEDULE CONTRACT FOR THE LEASE OF USED IBM 360 EQUIPMENT, WE CONTINUE TO BE OF THE BELIEF THAT COMDISCO WAS NOT UNDULY PREJUDICED. AS WE STATED IN OUR DECISION, "GSA HAS DETERMINED THAT, IN INSTANCES WHERE MANUFACTURERS CAN OFFER MAINTENANCE AND REPAIR SERVICES, IT WOULD BE IN THE GOVERNMENT'S BEST INTERESTS TO MAINTAIN ADP SCHEDULES ONLY FOR THOSE COMPANIES THAT WILL PROVIDE SUCH SERVICES ALONG WITH EQUIPMENT FOR BOTH PURCHASE AND/OR RENTAL." COMDISCO DID NOT OFFER TO PROVIDE SERVICES, AND THEREFORE WOULD NOT HAVE BEEN IN LINE FOR AN AWARD SINCE IBM DID OFFER TO PROVIDE THE DESIRED SERVICES ALONG WITH ITS EQUIPMENT. WHILE IT IS ALSO TRUE, AS COMDISCO CLAIMS, THAT THE SOLICITATION DID NOT EXPLICITLY REQUIRE OFFERS ON ALL ITEMS OF EQUIPMENT AND SERVICES, WE HAVE BEEN INFORMED BY GSA THAT COMDISCO HAD BEEN TOLD ON SEVERAL OCCASIONS, BOTH PRIOR TO SUBMISSION OF ITS OFFER AND SUBSEQUENTLY, THAT IT COULD NOT QUALIFY FOR A SCHEDULE CONTRACT BECAUSE IT WAS NOT ABLE TO FURNISH THE GOVERNMENT'S NEEDS UNDER THE SCHEDULE PROGRAM. ACCORDINGLY, IT APPEARS THAT COMDISCO WAS ON ACTUAL, ALBEIT INFORMAL, NOTICE THAT UNDER CURRENT GSA POLICY IT WOULD NOT BE ELIGIBLE FOR AWARD OF AN ADP SCHEDULE CONTRACT.

WE FIND COMDISCO'S ARGUMENT THAT GSA WOULD NOT HAVE FACED ANY UNDUE ADMINISTRATIVE BURDEN BY CONSIDERING THE COMDISCO PROPOSAL TO BE PERSUASIVE. HOWEVER, THE REFERENCE TO ADMINISTRATIVE BURDEN IN OUR DECISION WAS NOT IN REGARD TO THIS PARTICULAR PROCUREMENT, BUT RATHER TO THE ENTIRE ADP SCHEDULE PROGRAM AND THE LARGE NUMBER OF THIRD PARTY SUPPLIERS THAT COULD BE EXPECTED TO SUBMIT OFFERS IF THE SCHEDULE PROGRAM WERE MODIFIED TO PROVIDE FOR AWARDS TO SUCH SUPPLIERS. THUS, OUR STATEMENT THAT "WE HAVE NO BASIS FOR DISAGREEING WITH GSA THAT SCHEDULE CONTRACTING WITH THE THIRD PARTY MARKET WOULD INVOLVE BURDENSOME ADMINISTRATIVE PROBLEMS" REFERRED TO GSA'S OVERALL POLICY OF RESTRICTING THE ADP SCHEDULE PROGRAM AND NOT TO THE PARTICULAR FACTUAL SITUATION OF THIS PROCUREMENT.

WE HAVE CAREFULLY REVIEWED AND RECONSIDERED THIS ENTIRE MATTER. REMAIN OF THE BELIEF THAT GSA'S REFUSAL TO CONSIDER COMDISCO'S PROPOSAL WAS NOT LEGALLY OBJECTIONABLE AND THEREFORE THE PROTEST IS AGAIN DENIED. HOWEVER, WE POINT OUT THAT OUR CONCLUSION THAT GSA COULD PROPERLY RESTRICT THE ADP SCHEDULE PROGRAM TO CERTAIN TYPES OF FIRMS IS BASED ON EXISTING MARKET CONDITIONS. THE ADP MARKET IS A DYNAMIC ONE AND SUCH RESTRICTIONS, IN LIGHT OF FUTURE CONDITIONS, MAY WELL NOT CONTINUE TO BE IN THE BEST INTERESTS OF THE GOVERNMENT. THEREFORE, OUR FINDING THAT GSA HAS ADEQUATELY JUSTIFIED ITS CURRENT POLICIES WITH RESPECT TO ADMINISTERING THE ADP SCHEDULE PROGRAM SHOULD NOT BE REGARDED AS A PERMANENT ENDORSEMENT OF THOSE POLICIES. REVIEW OF THE ADP SCHEDULE PROGRAM WILL CONTINUE THROUGH OUR AUDIT FUNCTION.

IN ADDITION, WE THINK IT IS CLEAR THAT THE ESSENCE OF COMDISCO'S OBJECTIONS TO GSA'S APPROACH TO THE ADP SCHEDULE IS THAT COMDISCO WILL BE DENIED OPPORTUNITIES TO COMPETE WITH THE SCHEDULE CONTRACTOR. EVEN THOUGH GSA-PROMULGATED REGULATIONS DO NOT PERMIT ORDERS TO BE PLACED WITH THE SCHEDULE CONTRACTOR UNLESS AGENCY NEEDS CANNOT BE SATISFIED IN THE COMPETITIVE MARKETPLACE, COMDISCO CLAIMS THAT THE REGULATIONS ARE NOT ADHERED TO BY THE PROCURING AGENCIES AND THAT ORDERS ARE PLACED UNDER THE SCHEDULE WITHOUT COMPANIES SUCH AS COMDISCO HAVING BEEN PROVIDED AN OPPORTUNITY TO SATISFY AGENCY REQUIREMENTS.

IN OUR REPORT B-115369, "MORE COMPETITION NEEDED IN THE FEDERAL PROCUREMENT OF AUTOMATED DATA PROCESSING EQUIPMENT," MAY 7, 1974, WE STATED THAT "A SIGNIFICANT AMOUNT OF ADP EQUIPMENT IS STILL BEING PROCURED UNDER SCHEDULE CONTRACTS WITHOUT COMPETITION," AND THAT IN MANY INSTANCES "AGENCIES, WITHOUT SEEKING COMPETITION OR PREPARING A DETERMINATION OF LOWEST OVERALL COST, PLACED ORDERS UNDER SCHEDULE CONTRACTS ***." IN OUR DECISION OF FEBRUARY 13, 1975, WE RECOGNIZED THAT GSA'S CURRENT ADP PROCUREMENT POLICY REPRESENTED "GOOD FAITH EFFORTS TO ALLEVIATE THOSE ABUSES." MOREOVER, WE ARE SUGGESTING TO GSA THAT IT CONSIDER WAYS OF FURTHER ASSURING THAT THIRD PARTY MARKET COMPANIES LEARN OF PROPOSED ADP ACQUISITIONS AND BE GIVEN THE CHANCE TO COMPETE FOR AN AWARD. IN THIS REGARD, WE ARE SUGGESTING THAT GSA CONSIDER ADDING TO THE APPLICABLE REGULATIONS A REQUIREMENT THAT ORDERS INTENDED TO BE PLACED UNDER THE ADP SCHEDULE FIRST BE SYNOPSIZED IN THE COMMERCE BUSINESS DAILY SUFFICIENTLY PRIOR TO PLACEMENT OF THE ORDER SO THAT FIRMS FIRST LEARNING OF THE PROPOSED PROCUREMENT WILL HAVE A REASONABLE CHANCE TO DEMONSTRATE THEIR ABILITY TO SATISFY THE AGENCY'S NEEDS.