Matter of: Arcy Mfg. Company, Inc.; Beard Services, Inc.; Keys Wholesale, Inc.; Craftmaster Hardware Company, Inc. File: B-261538; B-261556; B-261566; B-261567 Date: August 14, 1995

Matter of: Arcy Mfg. Company, Inc.; Beard Services, Inc.; Keys Wholesale, Inc.; Craftmaster Hardware Company, Inc. File: B-261538; B-261556; B-261566; B-261567 Date: August 14, 1995

Requirement that responses to small purchase requests for quotations be submitted electronically is reasonable and consistent with the statutory requirement that competition for small purchases be promoted to the maximum extent practicable, where the record demonstrates that the agency's determination to require that quotes be electronically submitted was reasonably based and the requirement is not overly burdensome to prospective vendors.

Attorneys

DECISION

Arcy Mfg. Company, Inc., Beard Services, Inc., Keys Wholesale, Inc., and Craftmaster Hardware Company, Inc. protest the requirement that firms respond by electronic transmission to certain requests for quotations (RFQ) issued for small purchases by the Defense Industrial Supply Center (DISC), Defense Logistics Agency. [1] The protesters argue that this requirement is overly restrictive of competition.

We deny the protests.

The RFQs challenged by the protesters have been issued by DISC under "automated" procedures initiated by the agency for purchases up to $25,000. Under these procedures, RFQs are transmitted directly to an electronic bulletin board (EBB) maintained by the agency and, with certain exceptions not relevant here, remain on the EBB for 15 days. [2] Firms desiring access to the EBB to review the RFQs and submit quotes are required to first register with the agency by completing a small purchase agreement. [3] Once registered, [4] vendors can access the EBB by contacting an Electronic Data Interchange (EDI) service provider, [5] or through the vendors' own personal computers by dialing a telephone number or logging on to the Internet. [6] As stated in a notice to DISC suppliers dated March 3, 1995, the agency began requiring on May 15 that all quotes in response to RFQs issued by DISC under its automated procedures be submitted electronically through DISC's EBB.

The protesters argue that the requirement that all quotes be submitted electronically is inconsistent with the mandate that the agency "promote competition to the maximum extent practicable." The protesters explain that the requirement effectively precludes them from submitting quotes because they do not own computers.

As a general rule, the Competition in Contracting Act of 1984 (CICA) requires contracting agencies to obtain full and open competition through the use of competitive procedures when conducting procurements for property or services. 10 U.S.C. Sec. 2304(a)(1) (1994). However, CICA authorizes the use of less competitive, simplified procedures that "promote competition to the maximum extent practicable" for small purchases of property and services, that is, for purchases not expected to exceed $25,000. 10 U.S.C. Sec. 2304(g) (1988). An agency is to promote efficiency and economy in small purchase procurements by using simplified procedures in soliciting quotations, and is generally considered to have complied with the mandate that it "promote competition to the maximum extent practicable" when it solicits quotations from three or more qualified sources. [7] Federal Acquisition Regulation (FAR) Sec. 13.106(b)(1); Alpha Executive Servs., Inc., B-246173, Feb. 18, 1992, 92-1 CPD Para. 197.

As an initial matter, we note that many of the protested RFQs do not exceed $2,500 in estimated value. Under the Federal Acquisition Streamlining Act of 1994 (FASA), Sec. 4301, 41 U.S.C.A. Sec. 428(d) (West Supp. 1995), "[a] purchase not greater than $2,500 may be made without obtaining competitive quotations if the contracting officer determines that the price for the purchase is reasonable." [8] Because there is no allegation that the quotations received will be unreasonable as to price, there is no basis to object to the requirement that quotations in response to these "micro-purchase" RFQs be submitted electronically.

The question presented for the remaining small purchases protested here-- those in excess of $2,500--is whether the agency's requirement that quotes be submitted in a certain format, that is, electronically, constitutes a violation of the statutory requirement that competition be promoted to the maximum extent practicable. As set forth in detail below, we conclude, after evaluating the needs of the agency and the burdens imposed on the protesters by this requirement, that it does not.

The agency explains that its receipt of electronic quotations, as opposed to "paper" quotations, allows DISC to be more efficient, thereby reducing the administrative cost attendant with these small purchases. In this regard, the agency points out that, in contrast to the paper system which required manual receipt, processing, recording, and filing of the paper quotes, electronic quotes are automatically received, recorded, and distributed to the cognizant DISC buyer through DISC's computer system. The agency provides summary data which supports its claim that under the electronic method of purchasing its contracting personnel "are able to process more acquisitions in less time." For example, the agency points out that the purchasing units within DISC that rely on DISC's electronic method of purchasing accomplish small purchases on the average within 20 days (measured from the date of the purchase request to the date of award), as opposed to an average of 100 days for the purchasing units which continue to use the paper method of purchasing. The agency explains that approximately 3 labor hours are expended per purchase under the electronic method of purchasing, in comparison to an average of 7 hours where the paper method is used.

The agency also asserts that its use of the EBB to fulfill its small purchase requirements, rather than "paper" procedures, increases the contracting opportunities available to prospective vendors, and is thus consistent with the mandate that it promote competition to the maximum extent practicable. The agency explains here that through the EBB it solicits all vendors who have access to the EBB through an EDI service provider or through the use of their own personal computers, as opposed to the three vendors which ordinarily would be solicited under the agency's "paper" procedures.

With regard to the burden imposed on the protesters by the requirement that quotes be electronically transmitted, the essential difference between the electronic method of responding to RFQs and the paper method is that under the electronic method the protester is required to have access to a personal computer, certain telecommunications software, and a modem. These items are readily available for purchase on the commercial marketplace, or, as the record demonstrates, should a vendor not desire to purchase such equipment, access to the EBB can be obtained by contacting an EDI service provider. As such, we fail to see how requiring access to the EBB can be considered overly burdensome to a prospective DISC supplier. [9]

In our view, the record establishes that the agency has a reasonable basis for requiring that quotes be submitted electronically and that this requirement is not overly burdensome on the vendor community. In this regard, we note that no potential vendor is precluded from submitting quotes; only the format of quotes is being restricted. [10] See Essex Electro Eng'rs, Inc., B-252288.2, July 23, 1993, 93-2 CPD Para. 47 (protest that proposal format instructions were overly burdensome because they required an unnecessary amount of desktop publishing capabilities was denied where the formatting requirements were determined reasonable and could easily be met using a personal computer). In sum, under the circumstances here, DISC's requirement that quotes be submitted electronically is reasonable and consistent with the mandate that it promote competition to the maximum extent practicable for small purchase acquisitions.

The protests are denied.

1. The protests involve numerous RFQs not specifically listed here.

2. RFQs estimated to exceed $5,000 are also posted in the DISC bid room.

3. These agreements set forth certain terms, conditions, provisions and clauses which are incorporated into any purchase orders subsequently issued to the registered vendors who have submitted quotes through the EBB.

4. The agency represents that as of June 20, 1995 (the day before the agency filed its administrative report in response to these protests), there were 1,489 vendors registered for the EBB.

5. The agency maintains and makes available to interested vendors a list of EDI service providers that have been certified by the Department of Defense.

6. The Internet is a global "network of networks" that provides users a variety of capabilities, including sending electronic mail, transferring files, and accessing databases and supercomputers. See INFORMATION SUPERHIGHWAY: An Overview of Technology Challenges, GAO/AIMD-95-23 (Jan. 1995).

7. In contrast, full and open competition is defined as meaning that all responsible sources are permitted to submit bids or proposals on the procurement. 10 U.S.C. Sec. 2302(3) (1994); 41 U.S.C. Sec. 403(6) (1988).

8. This provision was effective upon the October 13, 1994, enactment of FASA and has been implemented by FAR Sec. 13.603(a)(FAC 90-24). FASA Sec. 4301(c), 41 U.S.C.A. Sec. 10a note (West Supp. 1995). In addition, FAR Sec. 13.601(c) encourages agencies to use electronic purchasing techniques to the maximum extent practicable for purchases up to $2,500.

9. The ability of a vendor to obtain access to the required equipment and thus DISC's EBB is demonstrated by the fact that two of the protesters here--Arcy Mfg. and Craftmaster Hardware--have accessed the EBB and have submitted quotations electronically to the agency.

10. Although the protested procurements were not conducted through the Federal Acquisition Computer Network (FACNET) authorized by FASA Sec. 9001, 41 U.S.C.A. Sec. 426 (West Supp. 1995), DISC's requirement that all quotes in response to RFQs posted on the EBB be submitted electronically is consistent with the requirement set forth in the regulations implementing FASA "that all responses to solicitations issued . . . through FACNET . . . be submitted through FACNET." FAR Sec. 4.505- 1(b)(FAC 90-29).