BNUMBER: B-270841; B-270842: 270843
DATE: May 1, 1996
TITLE: AT&T Corporation
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DOCUMENT FOR PUBLIC RELEASE
A protected decision was issued on the date below and was subject to a
GAO Protective Order. This version has been redacted or approved by
the parties involved for public release.
Matter of:AT&T Corporation
File: B-270841; B-270842: 270843
Date:May 1, 1996
Francis J. O'Toole, Esq., Robert J. Conlan, Jr., Esq., Joseph C. Port,
Jr., Esq., and Michael L. Shore, Esq., Sidley & Austin; and Nathaniel
Friends, Esq., and Steven W. DeGeorge, Esq., AT&T Corporation, for the
protester.
David S. Cohen, Esq., Carrie B. Mann, Esq., Cohen & White; and George
Affe, Esq., and Ronald Fouse, Esq., Sprint Communications Company,
L.P., and Carl L. Vacketta, Esq., Richard P. Rector, Esq., Kevin P.
Mullen, Esq., Holly Emrick Svetz, Esq., Piper & Marbury, MCI
Telecommunications Corp., the intervenors.
H. Jack Shearer, Esq., McKenzie Whitaker, Esq., Defense Information
Systems Agency, for the agency.
John Van Schaik, Esq., and Michael R. Golden, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Protest that three solicitations for the components of a
telecommunications network should be amended to permit offerors to
submit, and have evaluated, single, integrated proposals responding to
all of the agency's requirements in a single proposal is denied where
record shows that multiple proposal, multiple contract approach is
necessary for agency to assure that its minimum needs are met.
DECISION
AT&T Corporation protests the terms of requests for proposals (RFP)
Nos. DCA200-95-R-0129, DCA200-95-R-0137 and DCA200-95-R-0068, issued
by the Defense Information Systems Agency (DISA). The three
solicitations were issued for three components of the Defense
Information System Network (DISN), a telecommunications system
providing end-to-end common user, switched voice and video, and
dedicated data service in support of Department of Defense (DOD)
command, control, communication and intelligence (C3I) requirements.
AT&T principally argues that DISA has arbitrarily refused to allow
offerors to submit, and have evaluated, single proposals as an
alternative to individual proposals under each RFP.
We deny the protests.
BACKGROUND
Under a previous contract, the Defense Commercial Telecommunications
Network (DCTN) contract, which was awarded in 1984, AT&T provided DOD
with a leased telecommunications system to support DOD C3I
requirements, within the continental United States and locations
abroad. The DCTN contract expired on February 29, 1996; prior to that
date, DISA awarded the DISA Transition Contract (DTC) to AT&T as an
interim measure until the award of DISN contracts.[1]
Since the award of the DCTN contract in 1984, there have been
substantial changes in the telecommunications industry, including the
effects of the divestiture of AT&T, and the emergence of new
technologies involving the blending of the telecommunications industry
and the information services industry. According to DISA, its plan is
to hold competitions for each of several components of the network
resulting in multiple contracts. Thus, the DISN will consist of
multiple contracts awarded at different times under four acquisitions:
(1) The DISN Switched/Bandwidth Manager Services CONUS contract. The
bandwidth manager services contractor will provide the capability to
switch network traffic[2] at 12 service delivery points (SDP) and
provide bandwidth managers at 34 government specified SDPs.[3] In
addition, the contractor will provide network management services and
share network coordinating functions with other network contractors.
DISA intends to award one bandwidth manager services contract based on
a best value evaluation. The contract is to be for a 3-year term,
with six 1-year options. Proposals were required to be submitted by
January 2, 1996, and the award is anticipated by August 1, 1996.
(2) The DISN Transmission Services-CONUS contracts. DISA intends to
award one or more contracts for access transmission services and
backbone transmission services. Access transmission services
contracts will provide transmission lines between DOD facilities and
the network. In addition, video networks, discussed below, will be
connected to the network via such access lines. DISA has broken
access transmission services into eight geographic regions and intends
to award from one to eight contracts for such services on a
technically acceptable, lowest- priced basis. The backbone
transmission services contractor will provide wideband network level
transport facilities that will connect all bandwidth managers and
switches provided under the bandwidth manager services contract. DISA
intends to award a single backbone transmission services contract also
on a technically acceptable, lowest-price basis. The transmission
services contracts are to have 1-year base terms, with eight 1-year
options. Proposals were required to be submitted by March 1, 1996,
and the award is anticipated by October 15, 1996.
(3) The DISN Video Services-Global contract. The video services
contractor will provide dial-up video teleconferencing through three
video network hubs located in different geographic regions within the
continental United States. The access transmission services
contract(s) discussed above will provide access transport from the
video network hubs to the network and the backbone transmission
services contracts will provide network transport support for the
video service within the network. DISA plans to award one video
services contract based on a best value evaluation. That contract is
to have a 3-year base term, with two 1-year options. Proposals were
required by April 15, 1996, and the award is anticipated by December
15, 1996.
(4) The DISN Support Services-Global contract. The support services
contractor will provide support, on a time-and-materials basis, for
engineering, operations, hardware and software maintenance, integrated
logistics support planning, management information systems, network
management, provisioning, and other functions.
AT&T has protested the solicitations for the first three
acquisitions.[4]
In amendments to the RFPs, DISA released the following contractor
question and agency answer:
Question: "What is your concept of 'linked bids?'"
Answer: "Numerous comments were received during the draft DISN
RFP phase stating that significant economies could be realized if
the government used a total services approach (i.e. all elements
of DISN in one contract) versus the three separate contract
approach. The Government has no basis to make any judgment
concerning these comments. However, by staggering the
acquisition process for the three solicitations, a path is
provided to offerors which will allow for these economies to be
demonstrated in their pricing proposals. This path is termed as
the 'linked bids concept.'"
In subsequent amendments, DISA explained that under the linked bid
approach the awardee of the bandwidth manager services contract would
be able to propose prices on the later solicitations that take into
consideration the fact that it had won the bandwidth manager services
contract. According to DISA, this opportunity will exist because best
and final offers for the second solicitation will be required only
after the award under the first solicitation. Subsequent solicitation
amendments explained:
"Each solicitation stands on its own and proposals must fully
satisfy each requirement as they are set forth in the applicable
RFP. Any offer which includes a contingency stating essentially
that acceptance of their proposal for the [bandwidth manager
services] is contingent upon also having a successful offer for
the [transmission services] or [video services] shall be
rejected."
PROTEST ALLEGATIONS
In its initial protest submission, AT&T raised two issues.[5] First,
AT&T argued that DISA should amend the three solicitations to permit
offerors to submit, and have evaluated, single "proposals to supply
all of the services in the [DISN] Network to the government under a
single integrated contract." As AT&T otherwise stated, "AT&T could
put forth its most advantageous proposal for the required [network]
services in the context of a single proposal offering a complete set
of integrated services meeting all requirements set forth by [DISA]."
AT&T maintained that an integrated proposal would provide the
government savings of at least $1.5 billion and would provide a
superior technical solution compared to DISA's current approach.
Second, AT&T argued in its initial protest submission that DISA had
violated law and regulation by structuring the network based on design
specifications--as opposed to functional specifications--that exceed
the agency's minimum needs and will not result in the most technically
superior and cost effective solution to meeting DOD's
telecommunications requirements. Specifically, AT&T challenged
solicitation requirements concerning the number and geographic
location of bandwidth managers and switches; the type, capacity, and
geographic location of transmission facilities; and the type and
geographic location of video hardware and software.
Based on the protest, and a subsequent response to a request for
dismissal of the protest, we understood AT&T's protest to be seeking a
recommendation that DISA delete the detailed design requirements set
forth in the three solicitations and instead set forth broad
functional requirements which each offeror could respond to in the
manner it chose, either in individual proposals under each
solicitation or in single proposals responding to all three
solicitations. Under that approach, an offeror would be free to
design a network to meet the agency's functional requirements making
maximum use of its own telecommunications infrastructure. According
to AT&T, the agency's refusal to allow it to submit such a proposal is
"prejudicial to AT&T" and unduly restrictive of competition because it
handicaps AT&T's ability "to compete to [its] full potential," and
"robs AT&T of its ability to leverage its broad capabilities and
submit its most competitive proposal."
In its comments on the contracting agency's protest report, AT&T
maintained these two issues.[6] Also in its comments, for the first
time, AT&T suggested that the integrated solution that DISA should
permit could provide for recompetition of the components of the
network in the option years.
After maintaining these positions through its protest, its response to
the dismissal request, and its comments on the agency report, in
response to a supplemental submission from the agency AT&T changed its
position. Eleven weeks after the protest was filed, AT&T narrowed the
relief which it was seeking on the first count of its protest.
Specifically, in its supplemental response, AT&T stated,
"it has always been the essence of AT&T's protest that the
'integrated' proposal to which [AT&T] refers is an integrated
version of the identical requirements applicable to the separate
[network] solicitations . . . for the same contract components,
with the same base terms and same option years . . . as involved
in the separate proposals for the pieces now being solicited by
[DISA]."
Also in that submission, AT&T stated,
"[the] integrated approach that AT&T seeks in this protest is
merely the opportunity to submit to [DISA] as an alternative to
the agency's current piecemeal approach, a single proposal for
all [network] services called for under the individual
solicitations, which single proposal would be responsive to all
the provisions in those solicitations-including their various
technical specifications, various terms and conditions, and
options-and detail for the agency all the benefits inherent
therein."
AT&T essentially repeated this explanation of its current position at
the hearing held on this protest and in its post-hearing comments. At
the hearing, an AT&T official testified that AT&T is "seeking . . .
the right to prepare an integrated proposal that could then be
compared with other integrated proposals or other multivendor
proposals, just as the solicitation exists today. We are not looking
for anything that would change the scope of the contracts involved."
Hearing Transcript (Tr.) at 46. In addition, this same witness
testified that "[t]he protest turns upon our being able to provide an
integrated solution proposal in response to the government's
architecture and design as specified. If you were to ask me the
question would we prefer to do it in our normal manner, the answer is
clearly yes, but that's not the relief we're looking for right now."
Tr. at 49. However, in spite of the assertion that it was seeking
only this limited relief, in its post-hearing comments, AT&T stated
that it still maintains "[c]ount two of its protest," concerning "the
many architectural restrictions imposed by the challenged
solicitations. . . ."
ANALYSIS
The governing statutes and regulations allow contracting agencies
broad discretion in determining their minimum needs and the
appropriate method for accommodating them. See 10 U.S.C. sec.
2305(a)(1)(A) (1994); Federal Acquisition Regulation sec. 6.101(b) and
7.103(c). Government procurement officials, who are familiar with the
conditions under which supplies, equipment, or services have been used
in the past, and how they are to be used in the future, are generally
in the best position to know the government's actual needs, and
therefore, are best able to draft appropriate specifications. Gel
Sys., Inc., B-234283, May 8, 1989, 89-1 CPD para. 433. Although an agency
is required to specify its needs in a manner designed to achieve full
and open competition, and is required to include restrictive
provisions or conditions only to the extent necessary to satisfy its
needs, without a showing that competition is restricted, agencies are
permitted to determine how best to accommodate their needs, Mine
Safety Appliances Co., B-242379.2; B-242379.3, Nov. 27, 1991, 91-2 CPD para.
506, and we will not substitute our judgment for that of the agency.
Simula, Inc., B-251749, Feb. 1, 1993, 93-1 CPD para. 86; Purification
Envtl., B-259280, Mar. 14, 1995, 95-1 CPD para. 142.
Here, we conclude that the decision to solicit proposals to meet the
network requirements under three solicitations and to refuse to accept
consolidated proposals for all of the requirements of the network is
unobjectionable. First, most of what AT&T complains about simply
amounts to an assertion that the agency's requirements would be better
met by other means. Second, while the agency's approach, in
particular the "linked bids concept," may impose significant risks
upon AT&T and other offerors in preparing their proposals and
performing contracts awarded under the solicitations, we believe the
agency has the discretion to impose such risks. Finally, to the
extent that the agency's chosen approach may be restrictive of
competition, we conclude that DISA has justified the restrictions as
necessary to meet its minimum needs.
For the most part, AT&T is simply arguing that permitting offerors to
submit integrated proposals would better serve the government's needs
because it would result in a less costly and technically better
network solution. For example, AT&T maintains that DISA can secure
the "true best value" only by permitting offerors to submit single
proposals on all of DISA's requirements. Specifically, AT&T contends
that by permitting "integrated" proposals, the government could save
at least $1.5 billion over the cost of DISA's current approach.
According to AT&T, the $1.5 billion cost savings includes: (1)
[deleted] over the life of the program by eliminating the need for
local channel access circuits to interconnect the transmission service
contractor's (or contractors') points-of-presence to the bandwidth
managers service contractor's points-of-presence in each of 34
contractually specified locations; (2) [deleted] in duplicative
network management costs; (3) [deleted] in "hidden" internal
administrative costs; and (4) [deleted] under the support services
contract.
AT&T also asserts that permitting proposals on an integrated basis
would result in a superior technical solution--compared to DISA's
current approach--because an integrated approach would best ensure an
efficient, interoperable network; fewer service disruptions by
reducing the number of access circuits; minimal "down time" in the
network by holding a single contractor responsible for meeting network
reliability rates across all network services; expeditious remediation
of disruptions; efficient network management; efficient and timely
insertion of new services; and maximum end-to-end security.
These contentions simply are not for resolution in this forum. None
of these issues involves a restriction on competition. Even if AT&T
is correct that DISA's approach will result in additional expense to
the government and an inferior technical solution--matters which DISA
and two of AT&T's competitors vigorously dispute--the additional
expense and the inferior technical solution do not mean that the
solicitations restrict competition since, clearly, that result would
not be an indication that the government's needs were overstated.
Rather, those results would indicate that there might have been better
methods of accomplishing the agency's objectives. The agency's
judgment as to the best approach to accommodating its needs, however,
is within the decisionmaking function of the agency and is not subject
to the type of objection raised by AT&T. A&C Bldg. and Indus.
Maintenance Corp., B-230270, May 12, 1988, 88-1 CPD para. 451;
Purification Envtl., supra; Mine Safety Appliances Co., supra.
AT&T also objects to the piecemeal approach because, according to
AT&T, the winner of the bandwidth contract will have a significant
cost advantage over its competitors on the transmission contract
because it would be able to propose to connect its own bandwidth
manager and transmission facilities without the need for local channel
access circuits. AT&T maintains that the opportunity to avoid the use
of these local channel access circuits would give the winner of the
bandwidth contract an [deleted] advantage in the competition for the
transmission services contract. Also, according to AT&T, "[a]n
offeror for the bandwidth manager contract also has to take into
account in making an offer for [that] contract the risk that it may be
saddled with a losing contract if it wins bandwidth but, for some
reason, the transmission contract opportunity is canceled, or the
losing offerors convince [DISA] that the playing field must be leveled
for all offerors on the transmission contract."
An agency may properly impose substantial risk upon the contractor and
minimal risk upon itself, and offerors reasonably are expected to use
their professional expertise and business judgment in anticipating
risks and preparing their offers. J & J Maintenance, Inc., B-244366,
Oct. 15, 1991, 91-2 CPD para. 333. Here, the risks which the
solicitations impose on offerors appear to affect all offerors equally
and all offerors are equally capable of taking those risks into
account in preparing their proposals. It is within DISA's discretion,
in the exercise of its business judgment, to impose those risks.[7]
The remaining element of AT&T's protest is the allegation that the
solicitations are restrictive of competition because they prevent AT&T
from "compet[ing] in the ordinary course of business" and in its
"customary and most efficient manner." See New York Tel. Co. et al.,
69 Comp. Gen. 61 (1989), 89-2 CPD para. 435. Specifically, as AT&T
explains, in its "customary and most efficient manner" of competing
for a telecommunications network contract, the customer provides AT&T
and other offerors with the customer's broad functional requirements
for the network, including traffic data that describes the customer's
normal calling patterns. AT&T takes this data, and using its
extensive network design capabilities, including network design
computer programs, and selects an optimal network solution for the
customer, from a cost and technical standpoint, making maximum use of
AT&T's own telecommunications infrastructure assets.
Here, AT&T alleges that it is prevented from "compet[ing] in the
ordinary course of business" in its "customary and most efficient
manner" essentially in two ways. First, AT&T cannot make use of its
extensive network design capabilities. According to AT&T, DISA's
approach "supplants AT&T's customary Network design function, to
AT&T's severe prejudice." AT&T explains that network design "always
begins with an analysis of customer traffic data followed by an
iterative tradeoff analysis of AT&T's commercially available
telecommunications infrastructure assets. Through such analysis, AT&T
is able to maximize usage of its available assets to provide its most
cost-effective and technologically sound Network solutions." (Emphasis
in text.) AT&T states that "DISA has totally usurped the Network
design function and, in essence, dictated a Network design for the
offerors."
Second, AT&T asserts that it cannot make maximum use of its own
telecommunications infrastructure assets because the solicitations
specify detailed design requirements for the network--including the
number and geographic location of bandwidth managers and switches; the
type, capacity, and geographic location of transmission facilities;
and the type and geographic location of video hardware and
software--rather than broad functional requirements. [Deleted].
In response to these contentions, DISA explains that its need for its
current approach in part grew out of the agency's experience under the
long-term DCTN contract with AT&T. According to the agency, while the
DCTN contract served as a satisfactory contractual vehicle in its
earliest years, several problems became more evident in the later
years of that contract as the rate of technological innovation
accelerated with the divestiture of AT&T. As the agency explains,
among its principal concerns under the DCTN contract were high prices
and sluggish technological innovation.
DISA reports that the initial DCTN prices were based on tariffs
created in 1984 when the telecommunications industry was dominated by
AT&T and, over the years, DCTN services were priced through tariffs
largely insulated from competition. While the DCTN contract provided
for negotiation of prices, according to the agency, since the DCTN was
a long-term contract with a single provider, the agency had little
leverage in such negotiations. Consequently, according to the agency,
price adjustments on the DCTN contract lagged far behind the dramatic
fall in competitive prices throughout the telecommunications industry.
DISA reports that in a 1995 study, it compared prices for comparable
transmission service from three sources: (1) DCTN; (2) FTS2000 (GSA's
omnibus contract for federal agencies); and (3) the DISA Acquisition
Bulletin Board System (DABBS), a computerized acquisition system used
by the agency to competitively award dedicated, also called
point-to-point, services based on low price. The agency found the
DABBS prices invariably were lower than DCTN prices, usually by a wide
margin, and found the cost advantage between DCTN and FTS2000 varied
according to the scenario. DISA notes that this study preceded a
dramatic decline in FTS2000 rates based on a price recompetition
between AT&T and Sprint, the two service providers under that
contract.
Concerning technological innovation, DISA explains that when the DCTN
contract was awarded in 1984, AT&T was the technological leader in the
industry. According to DISA, however, during the intervening years,
other vendors, including smaller firms, often have initiated many
technological advances. DISA maintains that because it has been
locked into a long-term, integrated contract with a single vendor, the
agency has been deprived of the prompt infusion of technology which
could be obtained in the competitive marketplace. According to DISA,
as the lone DCTN contractor, AT&T has had no incentive to provide such
new technology unless it conforms to AT&T's overall network and then
at higher, non-market prices. As a result, DISA reports that under
the DCTN contract AT&T did not provide modernized switches,
synchronous optical network (SONET)[8] data transmission and was slow
to add other enhancements. Also, according to the agency,
negotiations under the DCTN contract concerning technological and/or
requirement changes have been burdensome and time consuming.
Thus, DISA's experience under the DCTN contract led the agency to
conclude that under a long-term contract with a single vendor
providing services the agency has no way to assure that it can gain
the benefits of falling prices and that a long-term DCTN-like contract
is an inadequate vehicle to permit the prompt infusion of new
technology in a period of accelerating technological and/or
requirement change. Based on the agency's experiences under the DCTN
contract, and as a result of a series of DISA studies of various
options available to the agency to replace the DCTN, DISA explains
that its principal rationales that support the current multi-proposal,
multi-contract approach are:
1. Positive control to support warfighting requirements. According
to DISA, it has structured these acquisitions in a multi-contract
approach based on discrete functional components of telecommunication
services in order to assure interoperability, integration, surge
capacity, technology insertion, security, and government control.
DISA maintains that under a single contract approach, the vendor has
an incentive to develop a self-contained proprietary network under
which the government lacks positive control over network elements
needed to ensure that the network is integrated and interoperable with
other government networks.
2. Maximize competition. DISA has concluded that the three
acquisitions structured in the manner it has chosen will attract
additional offerors who may not be willing or able to compete under
one large solicitation. For example, DISA notes that the transmission
contract is divided into eight regions in the hope that some
transmission providers, such as the Regional Bell Operating Companies,
which could not compete for a national contract, will compete for
regional transmission contracts. DISA notes that the current
multi-contract structure provides for frequent options on the
transmission services contracts and emphasizes that the strategy of
maximizing competition applies to recompetitions for the options as
well as the initial acquisition.
3. Incentive for improved contractor performance. DISA maintains
that its acquisition strategy for multiple contracts, which may be
more easily recompeted in the option years than a large contract with
a single vendor, creates an incentive for improved contractor
performance.
4. Lower prices. Based on its experience under the DCTN contract and
based on the cost comparison study mentioned above, DISA believes that
it can achieve lower prices for telecommunication services under an
acquisition approach that includes a number of smaller contracts, each
of which provides for frequent recompetitions. According to DISA, its
strategy was to break the procurements into functional components with
discreet and readily identifiable costs. If prices continue to
decline within these functional components--as they have since
deregulation and the divestiture of AT&T--DISA can achieve
commensurate price reductions through negotiations or by
recompetitions.
5. Technology insertion. While DISA acknowledges that it is possible
to attempt to negotiate technical enhancements with an omnibus
contractor, the agency states that it learned from the DCTN contract
that such negotiations can be time consuming and ponderous since the
vendor has a contract that it knows is difficult to recompete.
6. Maximization of best value. DISA maintains that its acquisition
strategy will drive offerors to propose the best value for the
government on each of the separate components of the network, not just
an average best value for the entire network. As DISA explains, if
each offeror can submit a single proposal, structured by the offeror
so as to make the best use of that offeror's infrastructure assets,
the offeror might be able to submit an overall best value proposal
compared to the sum of the individual proposals of other offerors.
Yet, the agency explains, the firm submitting such an integrated
proposal could retain some of the cost savings that its integrated
proposal creates and need not submit the lowest price for the separate
components, so long as it managed to provide an overall best value.
In contrast, the agency maintains that under its strategy, each
offeror would be forced to aggressively compete for each subsequent
contract even if it won the first contract, the bandwidth manager
services contract. DISA argues that the winner of the bandwidth
manager services contract would need to provide the agency with nearly
the full benefits of whatever economies of integration may exist for
the three contracts in order to be certain of winning the other
contracts.
In summary, DISA argues that accepting integrated proposals would be
inconsistent with the agency's minimum needs. Those needs include the
requirement for a contract structure that will, among other things,
provide for competition both on the initial awards and on the options,
as a means of achieving lower prices and technological infusion. In
addition, agency officials have explained that the mere presence of
frequent options, whether exercised or not, will create greater
incentives for contractor performance.
Where a protester challenges a solicitation's provisions as unduly
restrictive of competition, our Office will review the record to
determine whether the provisions are reasonably related to the
agency's legitimate minimum needs. QualMed, Inc., B-254397.13;
B-257184, July 20, 1994, 94-2 CPD para. 33; Tek Contracting, Inc.,
B-245454, Jan. 6, 1992, 92-1 CPD para. 28. Here, we conclude that DISA
has reasonably justified that approach as necessary to accomplish the
agency's minimum needs.
The record shows that DISA considered the possible benefits and
burdens to the agency of numerous acquisition approaches, some of
which resemble AT&T's proposed approach. For instance, in April 1995
DISA considered an approach calling for a single contractor to act as
an integrator. According to DISA, that approach did not meet the
agency's needs because, among other reasons, it would have locked the
agency into a long-term omnibus contract with one vendor during a
period of falling prices and rapid technological change in the
telecommunications industry. In another example, in an April 1995
DISN Strategy Analysis, DISA compared two approaches: (1) DISA
serving as the integrator, with multiple contracts, and (2)
integration by a single contractor, with only one separate DISN
support contract. DISA states that this was the agency's most direct
comparison of a single contractor approach to some combination of
multiple contracts. Although neither approach was ruled out at that
time, the record shows the agency again was concerned that under the
single contractor approach it would be locked in.
AT&T disparages both of these comparisons, arguing that the integrated
approaches which the agency considered are not the same as the
approach which AT&T advocates in this protest. Given the confusion in
the record, as we explained above, concerning AT&T's integrated
approach, it is not surprising that DISA can point to no analysis of
an acquisition approach identical to AT&T's integrated approach. In
addition, although AT&T also argues that the above described analyses
considered erroneous comparisons of the costs and potential savings
that may result from the various approaches, the alleged errors are
beside the point. What is important here is that the record shows
that DISA in fact compared various multiple contract approaches to
various single contractor approaches and consistently was concerned
that a single contractor approach would not meet the agency's minimum
needs, as explained above.[9]
Turning to DISA's explanation of its minimum needs, the fundamental
requirement of the agency's acquisition strategy is to maximize
competition for the various components of the network, both initially
and in the option years. The benefits that the agency expects to flow
from that competition are listed above. It is DISA's view that the
only way to assure real competition for those components, particularly
in the option years, is for the agency to control what each of the
components includes. As currently structured, the three
solicitations, by specifying the design of each of the components of
the network, control what each of the network components will include.
Thus, permitting AT&T or other offerors to use their network design
capabilities in order to propose a network design that makes maximum
use of the offeror's own telecommunications infrastructure assets
would be inconsistent with DISA's need to assure that competition is
possible in the option years. In other words, if DISA allowed
offerors to submit single proposals covering all of the requirements
of the network, because each vendor submitting such a proposal would
design its own network and maximize the use of its own
telecommunications infrastructure assets, while it might be possible
to compare each of those proposals for purposes of the initial awards,
there would be no way to assure that real competition would be
possible in the option years. This is so because, if a single vendor
initially won a contract for the entire DISN, the network created
under that contract would be based on components designed to maximize
the use of the awardee's infrastructure assets and those assets, which
would be inconsistent with the assets of all other vendors, would
present an insurmountable barrier to other vendors winning contracts
for components of the network in recompetitions in the option years.
AT&T maintains that DISA is speculating as to the results of a
competition between integrated proposals and combinations of piecemeal
proposals and argues that such speculation is inappropriate when, as
here, the agency can simply solicit both types of proposals and
compare them. We have looked unfavorably on an agency's speculating
as to the results of competition when the agency could simply solicit
and compare competitive proposals in order to determine the best
approach to meeting its needs. See Chesapeake & Potomac Tel. Co., 65
Comp. Gen. 380 (1986), 86-1 CPD para. 228; The Dept. of the Army, Request
for Modification of GAO Recommendation, B-191003, Jan. 9, 1979, 79-1
CPD para. 9. However, these cases concerned agency speculation as to the
prices that would be submitted in a competition when the actual prices
were easily available to the agency by soliciting and comparing
proposals. Here, in contrast, the issue is not the prices that
various competitors would submit in the initial competition, but the
prices which the agency will be required to pay for the services in
the option years.
Finally, AT&T argues that, if DISA deems recompetition of the pieces
of the network in the option years to be essential to the agency's
minimum needs, it "could provide itself the right in its integrated
proposal solicitation to recompete any one or all of the three pieces
in the option years." AT&T also argues that in addition to specifying
that integrated proposals must provide for recompetition of all
components in the option years, DISA also could require integrated
proposals to meet all other terms and conditions, design
specifications and components as set forth in the three solicitations.
According to AT&T, since this optional scenario is available to the
agency, the agency's refusal to permit integrated proposals is
arbitrary.
It is not clear why AT&T did not make this argument until 11 weeks
after the closing date for receipt of proposals, since our Bid Protest
Regulations do not contemplate the piecemeal presentation or
development of protest issues. Litton Sys., Inc., Data Sys. Div.,
B-262099, Oct. 11, 1995, 95-2 CPD para. 215. Nonetheless, we see nothing
persuasive about this argument. While it may be possible that the
agency's needs could be satisfied under this scenario as described by
AT&T, it is unclear to us what advantages this scenario has over the
linked bid approach from the perspective of any offeror, including
AT&T. Under this scenario, as explained by AT&T, AT&T would not be
able to take advantage of its extensive network design capabilities
and it would not be able to maximize the use of its infrastructure
assets. Although at the hearing AT&T's representative stated that
this scenario "would still be more cost effective" for AT&T than
submitting proposals utilizing the linked bid approach, Tr. at 64, we
simply do not see why AT&T could not propose whatever economies may be
available to it in the context of the linked bid approach as explained
by the agency.
The protests are denied.
Comptroller General
of the United States
1. In a previous decision, Sprint Communications Co., L.P.,
B-262003.2, Jan. 25, 1996, 96-1 CPD para. 24, we denied a protest
concerning the award of the interim contract to AT&T.
2."Traffic" is the flow of information in a telecommunications network
and a telecommunications "switch" is essentially a computer system
that routes or directs traffic to the desired location.
3. Bandwidth managers essentially link transmission facilities (or
transmission lines) within a telecommunications network.
4. The support services solicitation contains a conflict of interest
clause which prohibits the support services contractor and
subcontractors from acting as a prime contractor or subcontractor on
any of the other procurements; AT&T has no plans to submit a proposal
under that solicitation.
5. In a third issue, AT&T argued that the bandwidth manager services
solicitation included impermissibly vague requirements and ambiguous
specifications. After DISA amended the solicitation, AT&T withdrew
this allegation.
6. AT&T also argued,
"the second count of AT&T's protest [concerning the
restrictiveness of design specifications] is inextricably
linked with the first count. [DISA] correctly states
that, once it decided to adopt the piecemeal procurement
method, it had little option but to adopt some form of the
restrictive specification challenged here. . . . However,
[DISA] fails to recognize that this is an admission that
its decision to adopt a piecemeal approach amounted to a
decision to utilize a restrictive design specification
which imposed on the agency the responsibility to take
even greater care to make sure that the piecemeal approach
itself was necessary to satisfy its needs within the
meaning of [the Competition in Contracting Act of 1984]."
7. DISA and AT&T's competitors also dispute the risks imposed by the
solicitations as currently structured. [Deleted].
8. SONET, using fiber optic cables, is a high-speed, high bandwidth
service which enables users to transmit bulky files across wide area
networks.
9. AT&T also argues that the record demonstrates that prior to the
protest the agency never considered the relative benefits of
soliciting the type of integrated proposal advocated by AT&T, or
whether the purposes that DISA seeks to achieve--positive control,
maximum competition, incentives for improved contractor performance,
etc.--could also be achieved by soliciting piecemeal and integrated
proposals at the same time. We believe the agency has adequately
considered the relative merits of AT&T's proposed single contract
approach. We first note that in reviewing an agency's decision, we
look to the entire record, including statements and arguments made in
response to the protest, so that we may determine whether that
decision is supportable; we do not limit our review to the question of
whether the decision was properly documented at the time it was made.
See Allied-Signal Aerospace Co., Bendix Communications Div.,
B-249214.4, Jan. 29, 1993, 93-1 CPD para. 109. Moreover, AT&T apparently
would require an agency to demonstrate using only the record created
prior to the protest that it had "considered, evaluated and analyzed"
precisely the acquisition approach advocated by a protester, even
where, as in this case, that approach repeatedly changes throughout
the course of the protest. That requirement is simply unreasonable.
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