Protest Alleging That Equipment Lease With Competitor Is Prohibited by Federal Procurement Regulations

Xerox Corporation protested the placement of an order for the lease of a high speed printer by the Department of Commerce (DOC) with the International Business Machines Corporation under its automated data processing (ADP) Schedule contract with the General Services Administration (GSA). Xerox contended that regulations prohibit placement of orders against ADP Schedule contracts when the purchase price of the items ordered exceeds $300,000, which was the case in this instance. DOC argued that another regulation permits the use of ADP Schedule contracts for the continued lease or rental of installed equipment even if the purchase price exceeds $300,000, so long as a central processing unit is not involved. GSA took the position that the section cited by DOC applied only to contracts for the continued lease or rental of installed equipment, not to situations where the installed equipment is being replaced. In agreeing with GSA, GAO held that DOC had improperly procured the printers. The protest was sustained.