B-215493, B-215493.2, DEC 7, 1984, 64 COMP.GEN. 132

B-215493,B-215493.2: Dec 7, 1984

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FIRMS THAT DID NOT SUBMIT OFFERS OR HAD THEIR OFFERS FOUND TECHNICALLY UNACCEPTABLE ARE INTERESTED PARTIES TO PURSUE TIMELY PROTESTS AGAINST ALLEGEDLY UNDULY RESTRICTIVE SPECIFICATIONS THAT PREVENTED THEM FROM COMPETING OR FROM HAVING THEIR OFFERED ITEMS FOUND ACCEPTABLE. UNLESS CIRCUMSTANCES INDICATE THAT PERMITTING BOTH TYPES OF OFFERS WILL NOT RESULT IN A BETTER PRICE THAN ALLOWING ONE TYPE. IS REASONABLE. IS NOT A PROPER REASON TO RESTRICT COMPETITION SIMILARLY IN OTHER TYPEWRITER PROCUREMENTS WHERE THERE IS NO EVIDENCE THAT ANTICIPATED SAVINGS FROM STANDARDIZATION WOULD NOT BE OFFSET BY LOWER PRICES OBTAINED THROUGH COMPETITION AND OTHER MODELS WOULD MEET THE USER AGENCY'S NEEDS. CONTRACTS - NEGOTIATION - REQUESTS FOR PROPOSALS - SPECIFICATIONS - RESTRICTIVE - UNDUE RESTRICTION NOT ESTABLISHED DECISION TO LIMIT PROCUREMENT OF TYPEWRITERS TO MODELS THAT PREVIOUSLY HAD UNDERGONE A LENGTHY LIFE-CYCLE-COST (LCC) ANALYSIS WAS REASONABLE WHERE THE PROCUREMENT'S URGENCY DID NOT PERMIT AN LCC ANALYSIS OF OTHER MODELS.

B-215493, B-215493.2, DEC 7, 1984, 64 COMP.GEN. 132

CONTRACTS - PROTESTS - INTERESTED PARTY REQUIREMENT - POTENTIAL CONTRACTORS, ETC. NOT SUBMITTING BIDS, ETC. FIRMS THAT DID NOT SUBMIT OFFERS OR HAD THEIR OFFERS FOUND TECHNICALLY UNACCEPTABLE ARE INTERESTED PARTIES TO PURSUE TIMELY PROTESTS AGAINST ALLEGEDLY UNDULY RESTRICTIVE SPECIFICATIONS THAT PREVENTED THEM FROM COMPETING OR FROM HAVING THEIR OFFERED ITEMS FOUND ACCEPTABLE. EQUIPMENT - REPLACEMENT - TRADE-IN ALLOWANCES WHERE AGENCY SEEKS TO ACQUIRE NEW ITEMS AND PLANS TO SOLICIT TRADE IN ALLOWANCES FOR THE ITEMS BEING REPLACED, THE AGENCY MUST SOLICIT OFFERS FOR THE OLD ITEMS ON AN EXCHANGE (TRADE-IN) BASIS AND/OR A CASH BASIS, UNLESS CIRCUMSTANCES INDICATE THAT PERMITTING BOTH TYPES OF OFFERS WILL NOT RESULT IN A BETTER PRICE THAN ALLOWING ONE TYPE. CONTRACTS - NEGOTIATION - OFFERS OR PROPOSALS - EVALUATION - LIFE-CYCLE COSTING SOLICITATION'S LISTED METHOD FOR EVALUATING THE RESIDUAL-VALUE ELEMENT OF TYPEWRITERS' LIFE CYCLE COSTS, BY SURVEYING SELLERS OF USED TYPEWRITERS TO DETERMINE THE CURRENT TRADE-IN VALUE OF MODELS AND THEN DISCOUNTING THAT AMOUNT TO REPRESENT A REDUCTION IN VALUE FOR EACH YEAR OF THE MACHINES' USEFUL LIVES, IS REASONABLE. CONTRACTS - NEGOTIATION REQUESTS FOR PROPOSALS - SPECIFICATIONS - RESTRICTIVE - PARTS, ETC. PROCUREMENT GENERAL SERVICES ADMINISTRATION'S DECISION TO LIMIT ITS FEDERAL SUPPLY SERVICE REQUIREMENTS CONTRACTS FOR TYPEWRITERS TO MODELS WITH 15 INCH CARRIAGES, BASED ON ANTICIPATED SAVINGS FROM EFFICIENCY OF ACQUISITION AND ALLOWING SUPPLIERS TO REALIZE THE ECONOMIES OF SCALE AND LARGER PRODUCTION RUNS, IS NOT A PROPER REASON TO RESTRICT COMPETITION SIMILARLY IN OTHER TYPEWRITER PROCUREMENTS WHERE THERE IS NO EVIDENCE THAT ANTICIPATED SAVINGS FROM STANDARDIZATION WOULD NOT BE OFFSET BY LOWER PRICES OBTAINED THROUGH COMPETITION AND OTHER MODELS WOULD MEET THE USER AGENCY'S NEEDS. CONTRACTS - NEGOTIATION - REQUESTS FOR PROPOSALS - SPECIFICATIONS - RESTRICTIVE - UNDUE RESTRICTION NOT ESTABLISHED DECISION TO LIMIT PROCUREMENT OF TYPEWRITERS TO MODELS THAT PREVIOUSLY HAD UNDERGONE A LENGTHY LIFE-CYCLE-COST (LCC) ANALYSIS WAS REASONABLE WHERE THE PROCUREMENT'S URGENCY DID NOT PERMIT AN LCC ANALYSIS OF OTHER MODELS.

MATTER OF: CANON U.S.A. INC. AND SWINTEC CORPORATION, DECEMBER 7, 1984:

CANON U.S.A., INC. AND SWINTEC CORPORATION PROTEST THAT GENERAL SERVICES ADMINISTRATION (GSA) SOLICITATION NO. FGE-D3-75306-N-612-84, REQUESTING PROPOSALS TO SUPPLY 600 ELECTRIC SINGLE-ELEMENT TYPEWRITERS FOR THE DEPARTMENT OF DEFENSE DEPENDENT SCHOOLS (SCHOOLS) IN WEST GERMANY, UNDULY RESTRICTS COMPETITION AND UNFAIRLY FAVORS AN AWARD TO INTERNATIONAL BUSINESS MACHINES CORPORATION (IBM). BOTH PROTESTERS OBJECT TO THE SOLICITATION'S PROVISION FOR THE EVALUATION OF A TRADE-IN ALLOWANCE FOR THE GOVERNMENT'S OLD TYPEWRITERS, BECAUSE THE OLD EQUIPMENT CONSISTS OF 185 IBM TYPEWRITERS FOR WHICH IBM ALLEGEDLY HAS MORE USE THAN DO THE PROTESTERS. BOTH PROTESTERS ALSO CHALLENGE THE METHODOLOGY SET FORTH IN THE SOLICITATION FOR EVALUATING LIFE CYCLE COSTS, PARTICULARLY THE TYPEWRITERS' RESIDUAL VALUES, SINCE IBM'S MACHINES HAVE SIGNIFICANTLY HIGHER RESIDUAL VALUES THAN ANY OF ITS COMPETITORS' MACHINES. ADDITION, SWINTEC COMPLAINS THAT THE SOLICITATION UNREASONABLY RESTRICTS COMPETITION TO OFFERS OF TYPEWRITERS WITH A MINIMUM CARRIAGE LENGTH OF 15 INCHES, SINCE THE SOLICITATION LIMITS ELIGIBILITY FOR AWARD TO OFFERS OF THE 15-INCH MACHINES THAT GSA HAS EVALUATED PREVIOUSLY IN ITS LIFE CYCLE COSTING (LCC) QUALIFICATION PROGRAM.

WE SUSTAIN THE PROTEST IN PART AND DENY IT IN PART.

I. PROCEDURAL ISSUE-- INTERESTED PARTIES

INITIALLY, GSA HAS QUESTIONED WHETHER CANON AND SWINTEC MEET OUR BID PROTEST PROCEDURES' REQUIREMENT THAT A PROTESTER BE AN "INTERESTED PARTY" IN ORDER TO HAVE ITS PROTEST CONSIDERED. 4 C.F.R. SEC. 21.2(A) (1984).

GSA MAINTAINS THAT NEITHER PROTESTER HAS AN INTEREST IN THE AWARD. CANON'S CASE, THE FIRM, AFTER FILING ITS PROTEST, DID NOT SUBMIT AN OFFER WHEN GSA PROCEEDED WITH THE PROCUREMENT IN THE FACE OF THE PROTEST BECAUSE OF THE SCHOOLS' NEED TO HAVE THE TYPEWRITERS WHEN THE SCHOOLS OPENED IN AUGUST 1984. (A CONTRACT WAS AWARDED TO IBM.) REGARDING SWINTEC, GSA POINTS OUT THAT THE PROCUREMENT EFFECTIVELY WAS LIMITED TO OFFERORS OF TYPEWRITERS EVALUATED UNDER THE LCC QUALIFICATION PROGRAM, AND SWINTEC DOES NOT OFFER SUCH A PRODUCT.

BOTH PROTESTERS CONTEND, HOWEVER, THAT THEIR PROTESTS CHALLENGE ALLEGEDLY DEFECTIVE AND UNDULY RESTRICTIVE SPECIFICATIONS THAT PRECLUDED THEM FROM COMPETING OR FROM CONSIDERATION FOR AWARD, AND THAT THEIR INTEREST LIES IN AN OPPORTUNITY TO COMPETE UNDER APPROPRIATELY AMENDED SPECIFICATIONS.

WE HAVE RECOGNIZED THAT A NONBIDDING PARTY, WHO WOULD BE A POTENTIAL COMPETITOR UNDER A SOLICITATION PURGED OF THE ALLEGEDLY UNDUE RESTRICTIONS, IS AN INTERESTED PARTY FOR THE PURPOSE OF OUR REVIEW. E.G., DEERE & COMPANY B-212203, OCT. 12, 1983, 83-2 CPD PARA. 456. THAT CLEARLY IS THE SITUATION HERE, AND THE FACT THAT GSA ALREADY AWARDED A CONTRACT BASED ON A PUBLIC EXIGENCY DOES NOT DEFEAT THE COMPLAINANTS' INTEREST IN HAVING THEIR PROTESTS RESOLVED. WE THEREFORE WILL PROCEED TO CONSIDER THE PROTESTS' MERITS.

II. TRADE-IN ALLOWANCE

THE SOLICITATION PROVIDED SEPARATE LINE ITEMS FOR OFFERS TO ACQUIRE THE SCHOOLS' OLD TYPEWRITERS ON THE BASIS OF AN EXCHANGE OR "TRADE IN" ALLOWANCE THAT GSA WOULD DEDUCT FROM THE OFFERED PRICE TO SUPPLY THE NEW MODELS. CANON COMPLAINS THAT GSA'S EVALUATION OF TRADE-IN ALLOWANCES GAVE IBM AN UNFAIR ADVANTAGE SINCE ALL THE OLD TYPEWRITERS WERE IBM MACHINES. THE PROTESTER ALLEGES THAT IBM MAINTAINS ITS OWN NETWORK OF DEALERS OF USED IBM TYPEWRITERS, AND THUS ENJOYS, AMONG SUPPLIERS OF NEW TYPEWRITER MODELS, A "UNIQUE ABILITY TO ECONOMICALLY USE OR DISPOSE OF THEM AND COULD QUOTE MUCH HIGHER VALUES TO GSA." IN THIS RESPECT, BOTH GSA AND IBM AVER THAT THERE EXISTS A SIZEABLE THIRD PARTY MARKET OF USED-TYPEWRITER DEALERS FOR WHOM THE SCHOOLS' OLD TYPEWRITERS HAVE SUBSTANTIAL VALUE. IBM SUGGESTS THAT ANYONE COULD RESELL THE USED TYPEWRITERS TO THESE DEALERS AT THE SAME VALUE AS THE USED MACHINES REPRESENT TO IBM.

EVEN ASSUMING CANON IS CORRECT THAT IBM HAD AN ADVANTAGE FOR THE STATED REASON, THE GOVERNMENT HAS NO OBLIGATION TO ELIMINATE A COMPETITIVE ADVANTAGE THAT A FIRM MAY ENJOY BECAUSE OF ITS OWN PARTICULAR CIRCUMSTANCES UNLESS SUCH ADVANTAGE RESULTS FROM A PREFERENCE OR UNFAIR ACTION BY THE CONTRACTING AGENCY. E.G., ADC LTD., INC., B-211117.3, OCT. 24, 1983, 83-2 CPD PARA. 478. THERE IS NO SUGGESTION IN THE RECORD THAT IBM'S ADVANTAGE RESULTED FROM ANY UNFAIR GOVERNMENT ACTION. MOREOVER, THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, 40 U.S.C. SEC. 481(C) (1982), AUTHORIZES EXCHANGE ALLOWANCES TO BE APPLIED TO THE REPLACEMENT EQUIPMENT'S COST. MID-ATLANTIC INDUSTRIES, INC. B-181146, NOV. 21, 1974, 74-2 CPD PARA. 275

NEVERTHELESS, WHERE AN AGENCY CONTEMPLATES CONSIDERING OFFERS FOR THE GOVERNMENT'S OLD EQUIPMENT IN CONJUNCTION WITH AN ACQUISITION OF NEW EQUIPMENT, WE QUESTION WHETHER IT IS FAIR OR EVEN IN THE GOVERNMENT'S BEST INTEREST TO LIMIT OFFERS FOR THE OLD EQUIPMENT TO FIRMS ALSO OFFERING TO SUPPLY THE NEW EQUIPMENT, IF THERE EXISTS A THIRD-PARTY MARKET FOR THE OLD EQUIPMENT THAT MIGHT BE WILLING TO OFFER MORE ON A CASH BASIS THAN THE GOVERNMENT COULD HAVE OBTAINED FROM ANY EXCHANGE ALLOWANCE. IN THIS CASE, IF GSA HAD MADE THE SCHOOLS' OLD TYPEWRITERS AVAILABLE TO ANY POTENTIAL PURCHASER ON A CASH BASIS, AS WELL AS ON AN EXCHANGE BASIS, A USED- TYPEWRITER DEALER MIGHT HAVE OFFERED MORE FOR THE OLD MACHINES THAN IBM DID IN ITS TRADE-IN ALLOWANCE. THEN, GSA COULD HAVE SOLD THE OLD EQUIPMENT TO THE USED TYPEWRITER DEALER WHILE ACQUIRING THE NEW TYPEWRITERS AT THE LOWEST OFFERED PRICE WITHOUT REGARD TO ANY OFFERED TRADE-IN ALLOWANCE, AND REALIZED A SAVINGS.

IN FACT, THOUGH THE PARTIES HAVE NOT ADDRESSED THIS POINT, GSA'S OWN REGULATIONS PROMULGATED UNDER THE AUTHORITY OF 40 U.S.C. SEC. 481(C) GENERALLY APPEAR TO REQUIRE AN AGENCY TO CONSIDER PROCEEDING IN THIS MANNER. THOSE REGULATIONS REQUIRE THAT THE CONTRACTING AGENCY SOLICIT BIDS FOR THE PROPERTY BEING REPLACED ON A CASH BASIS AND/OR AN EXCHANGE BASIS UNLESS RECENT SOLICITATION FOR IDENTICAL ITEMS ON BOTH BASES HAS PRODUCED ONLY ONE TYPE OF BID, INDICATING THE FUTILITY OF SOLICITING THE OTHER TYPE, OR PRIOR SOLICITATION ON ONE BASIS HAS PROVEN CLEARLY INEFFECTIVE IN REDUCING THE COST OF THE ACQUISITION. FEDERAL PROPERTY MANAGEMENT REGULATIONS (FPMR), 41 C.F.R. SEC. 101-46.402 (1983). THE OBJECTIVE OF THIS REQUIREMENT IS TO ASSURE THAT THE GOVERNMENT OBTAINS THE MAXIMUM RETURN FOR THE PROPERTY TO BE SOLD OR EXCHANGED. ID.; 45 COMP.GEN. 671 (1966).

THE RECORD IN THIS CASE DOES NOT INCLUDE ANY STATEMENT FROM GSA OR ANY OTHER EVIDENCE TO EXPLAIN WHY THE SOLICITATION DID NOT PERMIT OFFERS FOR THE OLD TYPEWRITERS ON A CASH BASIS. IN LIGHT OF THE REGULATIONS REQUIRING THE AGENCY TO SOLICIT OFFERS ON A CASH AND/OR EXCHANGE BASIS UNLESS THERE EXIST CIRCUMSTANCES SHOWING LITTLE LIKELIHOOD THAT PERMITTING BOTH TYPES OF OFFERS WILL BENEFIT THE GOVERNMENT, THE RECORD FAILS TO DEMONSTRATE A PROPER BASIS FOR THE PROCUREMENT METHOD USED. SINCE THE CONTRACT ALREADY HAS BEEN AWARDED AND, AS WE HAVE BEEN ADVISED BY GSA, THE TYPEWRITERS DELIVERED, NO CORRECTIVE ACTION IS FEASIBLE IN THIS CASE. NEVERTHELESS ARE RECOMMENDING TO THE ADMINISTRATOR OF GSA THAT HE TAKE APPROPRIATE ACTION TO PREVENT A RECURRENCE OF THIS PROBLEM IN THE FUTURE.

CANON POINTS OUT THAT THE REGULATIONS ALSO REQUIRE THE CONTRACTING AGENCY TO MAKE A WRITTEN ADMINISTRATIVE DETERMINATION TO APPLY THE EXCHANGE ALLOWANCE TO THE ACQUISITION, FPMR, 41 C.F.R. SEC. 101 46.202(A)(4), AND ALLEGES THAT GSA FAILED TO DO SO. WE BELIEVE, HOWEVER, THAT THIS REQUIREMENT IS PROCEDURAL IN NATURE, SUCH THAT THE AGENCY'S FAILURE TO FOLLOW IT WOULD NOT PREJUDICE ANY OFFEROR NOR AFFECT THE VALIDITY OF AN AWARD.

III. LCC METHODOLOGY AND RESIDUAL VALUE

THE CRUX OF THE PROTESTER'S CHALLENGE TO THE SOLICITATION'S LCC PROVISIONS IS THAT THE METHODOLOGY FOR COMPUTING AND EVALUATING RESIDUAL VALUE, AFTER AN ASSUMED USEFUL LIFE OF 10 YEARS, IS UNREASONABLE. THE PROVISIONS BASICALLY CREDIT AN OFFEROR WITH THE CURRENT MARKET TRADE-IN OR SURPLUS-SALE VALUE OF ITS MODELS, ASCERTAINED THROUGH A SURVEY OF COMPANIES THAT SELL LARGE NUMBERS OF USED TYPEWRITERS, AND DISCOUNT THAT AMOUNT TO REFLECT A COMPOUNDED YEARLY 10-PERCENT REDUCTION IN VALUE OVER A 10-YEAR PERIOD. THE PROTESTERS ARGUE THAT AN ESTIMATE OF A MACHINE'S RESIDUAL VALUE AFTER 10 YEARS THAT IS BASED ON CURRENT MARKET VALUES IS UNREASONABLE AND CANNOT BEAR ANY REASONABLE RELATIONSHIP TO THE MACHINE'S ACTUAL VALUE IN 10 YEARS. IN THIS RESPECT, BOTH PROTESTERS CONTEND THAT THE ELECTRICALLY POWERED MECHANICAL TYPEWRITERS INVOLVED IN THIS PROCUREMENT WILL HAVE PRACTICALLY NO VALUE IN 10 YEARS BECAUSE OF THE AVAILABILITY OF MORE SOPHISTICATED ELECTRONIC MACHINES WITH SUCH FEATURES AS AUTOMATIC CORRECTING MEMORY.

WE PREVIOUSLY HAVE REJECTED AN OBJECTION TO A SIMILAR GSA METHODOLOGY-- BASED PRINCIPALLY ON INDUSTRY PUBLICATIONS-- FOR EVALUATING TYPEWRITERS' RESIDUAL VALUES. SEE REMINGTON RAND CORP., ET AL., B-204084, ET AL., MAY 3, 1982, 82-1 CPD PARA. 408, AT PAGES 12 13. WE HELD THAT RESIDUAL VALUE SIMPLY COMPRISES A COST ELEMENT THAT LOGICALLY CANNOT BE IGNORED DESPITE THE OBSERVED DIFFICULTY IN DETERMINING THE PRECISE VALUE OF EACH MODEL, AND WE FOUND THAT GSA HAD A REASONABLE, OBJECTIVE APPROACH TO THE TASK. GSA'S CURRENT METHOD FOR DETERMINING RESIDUAL VALUE IS BASED ON CURRENT VALUE DERIVED BY SURVEY RATHER THAN ON INDUSTRY PUBLICATIONS, WHICH WE NOTE DO NOT PROVIDE ACTUAL RESIDUAL VALUES FOR ALL THE ELIGIBLE MODELS SINCE NOT ALL OF THEM HAVE BEEN AVAILABLE FOR 10 YEARS. WE BELIEVE THE CURRENT METHOD IS AT LEAST AS OBJECTIVE AND REASONABLE AS THE METHOD DISCUSSED IN REMINGTON RAND CORP., SUPRA. WE THEREFORE DENY THE PORTIONS OF THE PROTEST CONCERNING THE METHOD FOR CALCULATING RESIDUAL VALUE. REGARDING THE ALLEGEDLY IMPENDING OBSOLESCENCE OF ELECTRICALLY POWERED MECHANICAL TYPEWRITERS, WE POINT OUT THAT ELECTRONIC TYPEWRITERS ARE AVAILABLE TODAY, AND THERE STILL EXISTS A MARKET FOR OTHER TYPEWRITERS. THE PROTESTERS HAVE FAILED TO DEMONSTRATE THAT SUCH WILL NOT BE THE CASE IN THE FUTURE.

CANNON ALSO COMPLAINS THAT THE SOLICITATION'S PROVISIONS FOR PROJECTING RESIDUAL VALUE BASED ON CURRENT MARKET VALUE ARE INCONSISTENT WITH WHAT GSA SAID IT WAS GOING TO DO WHEN IT STARTED THE LCC QUALIFICATION PROGRAM. SINCE THE CURRENT SOLICITATION ANNOUNCED THIS METHODOLOGY FOR THE PURPOSE OF THIS PROCUREMENT, HOWEVER, WE DO NOT BELIEVE THAT ANY OF GSA'S ALLEGED PREVIOUS REPRESENTATIONS PROVIDES A VALID BASIS FOR PROTEST.

IV. ALLEGEDLY UNDULY RESTRICTIVE REQUIREMENTS

SWINTEC COMPLAINS THAT BY LIMITING THIS PROCUREMENT TO MODELS THAT HAD BEEN EVALUATED IN THE LCC QUALIFICATION PROGRAM, WHICH ITSELF WAS LIMITED TO MACHINES WITH A MINIMUM CARRIAGE LENGTH OF 15 INCHES, THE SOLICITATION PRECLUDED SWINTEC FROM OFFERING ITS MODEL 1146CM, WHICH APPARENTLY HAS A CARRIAGE LENGTH OF 14 3/4 INCHES.

GSA, IN RESPONDING TO THE PROTEST, DOES NOT CONTEND THAT THE SCHOOLS' ACTUAL NEEDS ARE FOR MACHINES WITH CARRIAGE LENGTHS GREATER THAN 14 3/4 INCHES. RATHER, THE AGENCY'S REPORT EXPLAINS THAT IN SEPTEMBER 1982 THE AGENCY DECIDED, FOR THE PURPOSE OF MAKING AWARDS OF FEDERAL SUPPLY SCHEDULE (FSS) CONTRACTS COVERING FEDERAL AGENCIES' REQUIREMENTS FOR ELECTRIC SINGLE-ELEMENT TYPEWRITERS, TO STANDARDIZE FUTURE PROCUREMENTS UNDER THE LCC QUALIFICATIONS PROGRAM. THE REASON FOR STANDARDIZATION WAS TO INCREASE THE EFFICIENCY OF ACQUISITION, SIMPLIFY THE PRODUCT LINE, AND PROMOTE BETTER PRICES BY ENABLING SUCCESSFUL SUPPLIERS TO REALIZE THE ECONOMIES OF SCALE AND LARGER PRODUCTION RUNS.

WE SEE NO BASIS TO OBJECT TO GSA'S DECISION TO STANDARDIZE FOR PURPOSES OF FSS CONTRACT AWARDS. WE BELIEVE IT IS LOGICAL THAT BY STANDARDIZING THE GOVERNMENT'S REQUIREMENTS, TO THE EXTENT POSSIBLE, GSA COULD REDUCE THE NUMBER OF TYPEWRITER CONTRACTORS AND ANTICIPATE RECEIVING LOWER-PRICED OFFERS BASED ON THE LARGER ESTIMATED REQUIREMENTS FOR THE STANDARDIZED TYPEWRITERS.

THE REASON BEHIND STANDARDIZING CARRIAGE SIZE FOR PURPOSES OF THE FSS CONTRACT, HOWEVER, DOES NOT SUPPORT GSA'S ACTION HERE, SINCE THE PURCHASE IS NOT FROM AN FSS CONTRACT. THE FACT IS THAT GSA COULD NOT FULFILL THE SCHOOLS' NEED FOR 600 MACHINES BY PLACING AN ORDER AGAINST THE FSS CONTRACT BECAUSE THE DOLLAR AMOUNT INVOLVED EXCEEDED THE CONTRACT'S MAXIMUM ORDER LIMITATION. THIS PROCUREMENT THEREFORE WAS SEPARATE AND DISTINCT FROM ANY REQUIREMENTS CONTRACT OR ANY OTHER PROCUREMENT, AND WE DO NOT UNDERSTAND HOW GSA'S EXPLAINED BENEFITS DERIVING FROM STANDARDIZATION APPLY TO THIS CASE. WE NOTE IN THIS RESPECT THAT GSA DOES NOT ARGUE THAT STANDARDIZATION WAS NECESSARY TO MEET THE GOVERNMENT'S FUNCTIONAL REQUIREMENTS, BUT ONLY TO OBTAIN LOWER PRICES UNDER A SINGLE FSS REQUIREMENTS CONTRACT.

THE RESULT OF GSA'S ACTION HERE THUS WAS TO LIMIT THE COMPETITION TO MODELS THAT PREVIOUSLY HAD UNDERGONE LCC TESTING WITHOUT REGARD TO THE FACT THAT THE GROUP OF MODELS THAT HAD DONE SO WAS NOT NECESSARILY COEXTENSIVE WITH THE GROUP OF MODELS THAT WOULD SATISFY THE GOVERNMENT'S FUNCTIONAL REQUIREMENTS IN THIS PROCUREMENT. MODELS THAT MIGHT HAVE BEEN ABLE TO MEET THE SCHOOLS' NEEDS, BUT NEVER HAD BEEN ACCEPTED PREVIOUSLY FOR LCC TESTING BECAUSE OF THEIR SHORTER CARRIAGE LENGTHS, WERE THUS PREVENTED FROM ANY OPPORTUNITY TO QUALIFY FOR THIS PROCUREMENT. THERE IS NO EVIDENCE THAT SAVINGS FLOWING FROM STANDARDIZATION WOULD NOT BE OFFSET BY LOWER PRICES OBTAINED THROUGH FULL COMPETITION FOR THE 600 TYPEWRITERS. SEE CPT CORPORATION, B-211464, JUNE 7, 1984, 84-1 CPD PARA. 606. THE RECORD, HOWEVER, PROVIDES ANOTHER, AND IN OUR VIEW LEGITIMATE, REASON FOR LIMITING THIS PROCUREMENT TO TYPEWRITERS THAT PREVIOUSLY HAD UNDERGONE LCC TESTING. WHILE LCC TESTING WAS NECESSARY TO ASSURE THAT THE GOVERNMENT OBTAINED THE LEAST COSTLY TYPEWRITERS, THERE WAS INSUFFICIENT TIME TO CONDUCT TESTING PRIOR TO THE DATE THE SCHOOLS NEEDED THE TYPEWRITERS. IN THIS REGARD, WE PREVIOUSLY HAVE HELD THAT BECAUSE GSA'S CONFINING COMPETITION FOR FSS CONTRACTS TO TYPEWRITERS THAT HAVE UNDERGONE LCC TESTING MAY WELL SERVE A LEGITIMATE NEED OF THE GOVERNMENT, GSA PROPERLY MAY PRECLUDE A FIRM FROM COMPETING UNTIL ITS MODEL UNDERGOES SUCH TESTING. SEE REMINGTON RAND CORP., ET AL., SUPRA, WHERE WE DID NOT OBJECT TO A RESTRICTION LIKE THE ONE HERE. WE THEREFORE WILL NOT OBJECT TO GSA'S RESTRICTING THIS PROCUREMENT TO LCC-TESTED MODELS.

WE POINT OUT, HOWEVER, THAT IMPLICIT IN OUR HOLDING IN REMINGTON RAND WAS RECOGNITION NOT ONLY THAT THE NECESSARY TESTING WAS SO EXTENSIVE THAT, AS A PRACTICAL MATTER, IT COULD NOT BE PERFORMED WITHIN THE TIME CONSTRAINTS OF THE PROCUREMENT, BUT THAT AN OPPORTUNITY TO MAKE THEIR PRODUCTS ELIGIBLE FOR THE PROCUREMENT WAS EXTENDED TO ALL MANUFACTURERS OF MODELS THAT WOULD MEET GSA'S LEGITIMATE NEEDS AND WERE AVAILABLE FOR TESTING REASONABLY IN ADVANCE OF THE PROCUREMENT. WE THEREFORE ARE RECOMMENDING TO THE ADMINISTRATOR, BY SEPARATE LETTER, THAT IF GSA DESIRES TO LIMIT FUTURE PROCUREMENTS TO OFFERS OF MODELS THAT HAVE UNDERGONE LCC TESTING, THE AGENCY SHOULD TAKE STEPS TO ALLOW ANY MODEL CAPABLE OF MEETING THE GOVERNMENT'S NEEDS AN OPPORTUNITY TO UNDERGO LCC TESTING SUFFICIENTLY IN ADVANCE OF THE UPCOMING PROCUREMENTS TO BE ELIGIBLE FOR EVALUATION. OTHERWISE, TO STRIKE A BALANCE BETWEEN THE DESIRABILITY OF LCC TESTING AND THE GENERAL REQUIREMENT TO MAXIMIZE COMPETITION, THE AGENCY SHOULD LIMIT ITS EVALUATION OF LCC FACTORS TO THOSE UNDER WHICH ALL POTENTIAL OFFERORS HAVE A FAIR AND EQUAL OPPORTUNITY TO OFFER ANY MODEL CAPABLE OF MEETING THE GOVERNMENT'S NEEDS.

V. CONCLUSION

WE SUSTAIN THE PROTEST ABOUT THE TRADE-IN ALLOWANCE TO THE EXTENT THAT GSA FAILED TO SOLICIT OFFERS FOR THE GOVERNMENT'S OLD TYPEWRITERS ON A CASH AND/OR EXCHANGE BASIS. THE PROTESTERS' CHALLENGE TO THE SOLICITATION'S METHODOLOGY FOR COMPUTING AND EVALUATING RESIDUAL VALUE IS DENIED. WE ALSO DENY THE PORTION OF SWINTEC'S PROTEST COMPLAINING THAT THE SOLICITATION IN EFFECT UNDULY RESTRICTED COMPETITION TO OFFERS OF MODELS THAT HAD UNDERGONE LCC TESTING AND HAD A MINIMUM CARRIAGE LENGTH OF 15 INCHES.