B-208325, FEB 8, 1983

B-208325, FEB 8, 1983

DIGEST: IN VIEW OF FEDERAL COMMUNICATIONS COMMISSION (FCC) REGULATION EXEMPTING INTERFACE EQUIPMENT INSTALLED ON THE PREMISES OF A TELECOMMUNICATIONS NETWORK CUSTOMER FROM TARIFFING AND OF OTHER SOLICITATION PROVISIONS WHICH CONTEMPLATE THE USE OF NONTARIFFED SOFTWARE TO PERFORM THE INTERFACE FUNCTION, A SOLICITATION REQUIREMENT THAT PRICES BE BASED UPON CURRENT OR PENDING TARIFFS FILED WITH THE FCC MUST BE INTERPRETED AS INAPPLICABLE TO PRICES RELATING TO NON-TARIFFED EQUIPMENT. THEREFORE, AWARD ON BASIS OF AN OFFER WHICH INCLUDED INTERFACE EQUIPMENT WHICH WAS NOT TARIFFED WAS PROPER.

TYMNET, INC.:

TYMNET, INC. PROTESTS THE AWARD OF A CONTRACT TO GTE TELENET COMMUNICATIONS CORPORATION UNDER A REQUEST FOR QUOTATIONS (RFQ) ISSUED BY THE SELECTIVE SERVICE SYSTEM (SSS) ON JUNE 30, 1982. THE SOLICITATION IS FOR THE PROVISION OF VALUE ADDED NETWORK SERVICES FOR A PERIOD OF 6 MONTHS. TYMNET CONTENDS THAT THE AWARD IS IMPROPER BECAUSE GTE'S QUOTATION DOES NOT CONFORM CURRENT OR PENDING TARIFFS. WE DENY THE PROTEST.

A VALUE ADDED NETWORK IS A SYSTEM OF COMMUNICATIONS NETWORKS AND SWITCHES WHICH ENABLES THE USER'S COMMUNICATIONS TERMINALS TO INTERFACE WITH A CENTRAL COMPUTER (THE HOST COMPUTER). UNDER THIS SYSTEM THE GOVERNMENT SHARES, BY LEASE, THE CIRCUITRY WITH OTHER CUSTOMERS OF THE VAN CONTRACTOR. THE RFQ CONTEMPLATES A VAN THAT PROVIDES A COMMUNICATIONS LINK BETWEEN THE SSS MINI-COMPUTER AT THE DATA CENTER IN ARLINGTON, VIRGINIA AND TERMINALS IN SIX REGIONAL OFFICES.

DATA ARE TRANSMITTED THROUGH THE NETWORK FROM SOURCE TO DESTINATION BY AN OPERATION CALLED "PACKET SWITCHING." FIRST, THE DATA TO BE TRANSMITTED ARE ASSEMBLED INTO GROUPS OF FIXED LENGTH CALLED PACKETS. IN ADDITION TO THE DATA, EACH PACKET CONTAINS, ERROR DETECTION INFORMATION, THE "ADDRESS" OF THE DESTINATION OF THE PACKET, AND "FLAGS" THAT SIGNAL THE BEGINNING AND END OF THE PACKET. THE PACKETS ARE THEN TRANSMITTED IN QUICK BURSTS THROUGH THE CARRIER'S SWITCHING NETWORK TO THE DESTINATION.

THE PACKETS MAY BE ASSEMBLED BY THE HOST COMPUTER WITH THE USE OF SPECIAL SOFTWARE PROGRAMS OR BY A SEPARATE INTERFACE PROCESSOR INSTALLED ON THE CUSTOMER'S PREMISES. THE RFQ LISTS TWO SOFTWARE PROGRAMS WHICH SSS BELIEVED NECESSARY TO PERFORM THIS INTERFACE FUNCTION. GTE SUBMITTED ALTERNATE PRICES, ONE ON THE BASIS OF THE SOFTWARE PROGRAMS (ON THE ASSUMPTION THEY WOULD BE SUPPLIED BY THE GOVERNMENT) AND THE OTHER ON THE BASIS OF AN INTERFACE PROCESSOR IT WOULD SUPPLY, THE TP 3010 NETWORK INTERFACE PROCESSOR. SSS AWARDED THE CONTRACT TO GTE ON THE BASIS OF THE PRICE WHICH INCLUDED THE TP 3010 CONFIGURATION.

THE SOLICITATION PROVIDES THAT PRICES SHOULD BE BASED UPON CURRENT OR PENDING FEDERAL COMMUNICATIONS COMMISSION TARIFFS. TYMNET POINTS OUT THAT AT THE TIME OF AWARD THE TP 3010 OFFERED BY GTE DID NOT APPEAR ON GTE'S THEN-CURRENT TARIFF AND WAS NOT THE SUBJECT OF ANY PENDING TARIFF FILED BY GTE. ALL ITEMS AND SERVICES OFFERED BY TYMNET WERE TARIFFED AT THE TIME IT SUBMITTED ITS QUOTATION. TYMNET CONTENDS THAT THE EVALUATION OF GTE'S QUOTATION ON THE BASIS OF A NON-TARIFFED ITEM WAS INCONSISTENT WITH THE PRICING PROVISION OF THE SOLICITATION AND AFFORDED GTE AN UNFAIR COMPETITIVE ADVANTAGE:HAD TYMNET KNOWN NON TARIFFED ITEMS COULD BE PROVIDED, IT COULD HAVE SUBMITTED A LOWER QUOTATION.

SSS CONTENDS, HOWEVER, THAT TYMNET INTERPRETS THE REQUIREMENT THAT THE QUOTATIONS BE BASED ON TARIFFED PRICES INCORRECTLY IN THAT PROCESSORS ARE NOT SUBJECT TO THE PROVISION. SSS REASONS THAT SINCE THE RFQ LISTS INTERFACE SOFTWARE PROGRAMS THAT ARE NOT PRODUCED OR SUPPLIED BY EITHER OF THE TARIFFED CARRIERS AND THAT ARE NOT SUBJECT TO A TARIFF, ANY OTHER EQUIPMENT WHICH ESSENTIALLY PERFORMS THE SAME FUNCTION NEED NOT BE TARIFFED.

IN VIEW OF THE RFQ PROVISION CONCERNING SOFTWARE, WE FIND THAT THE TARIFFED PRICING LANGUAGE DOES NOT ESTABLISH A FIRM REQUIREMENT THAT ALL EQUIPMENT ASSOCIATED WITH THE PROVISION OF TARIFFED SERVICES BE TARIFFED. MOREOVER, SINCE TARIFF REQUIREMENTS RESULT FROM LAWS AND REGULATIONS, THE TARIFFING REQUIREMENT OF THE SOLICITATION MUST BE CONSTRUED IN LIGHT OF THOSE LAWS AND REGULATIONS. A RECENTLY PROMULGATED FEDERAL COMMUNICATIONS COMMISSION REGULATION, WHICH WAS IN EFFECT PRIOR TO THE RFQ DATE, PROVIDES THE FOLLOWING CONCERNING EQUIPMENT, SUCH AS THE INTERFACE PROCESSOR, WHICH IS INSTALLED ON THE PREMISES OF THE CUSTOMER:

"EXCEPT AS OTHERWISE ORDERED BY THE COMMISSION, AFTER MARCH 1, 1982, THE CARRIER PROVISION OF CUSTOMER-PREMISES EQUIPMENT USED IN CONJUNCTION WITH THE INTERSTATE TELECOMMUNICATIONS NETWORK SHALL BE SEPARATE AND DISTINCT FROM PROVISION OF COMMON CARRIER SERVICES AND NOT BE OFFERED ON A TARIFFED BASIS."

47 C.F.R. 64.702(E) (1981).

SINCE THE TP 3010 IS CARRIER-PROVIDED AND INSTALLED ON CUSTOMER PREMISES, IT IS CLEAR FROM THIS REGULATION THAT THE TP 3010 IS NOT SUBJECT TO TARIFF REQUIREMENTS. THEREFORE, WE BELIEVE THE SOLICITATION PROVISION REGARDING TARIFFING, WHEN READ IN CONJUNCTION WITH THE REGULATION, CANNOT REASONABLY BE INTERPRETED TO REQUIRE TARIFFED PRICING FOR THE TP 3010. THEREFORE, WE CANNOT CONCLUDE THAT THE AWARD WAS IMPROPER.

THE PROTEST IS DENIED.