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SMS Data Products Group Inc. v. United States

Decided: July 29, 1988.


Appealed from: General Services Administration Board of Contract Appeals.

Rich, Circuit Judge, Baldwin, Senior Circuit Judge, and Smith, Circuit Judge.


RICH, Circuit Judge.

This appeal is from a decision of the General Services Board of Contract Appeals (GSBCA or board), which denied a protest filed by SMS Data Products Group, Inc. (SMS). SMS protested the award of a contract for automatic data processing (ADP) equipment to Severn Companies, Inc. (Severn), on the basis that the contracting officer's decision to exclude SMS from participating in the reprocurement through which the contract was awarded violated various procurement statutes and regulations. The board denied SMS's protest because it concluded that the contracting officer's decision to exclude SMS from the reprocurement was reasonable and not inconsistent with procurement rules and regulations. We reverse and remand with instructions.


A. The Initial Solicitation

On June 30, 1986, the Department of Health and Human Services (HHS) issued Solicitation No. 282-86-0060 for ADP equipment, with the purpose of procuring "multiuser, multitasking computer systems for the Indian Health Service [IHS] Area Offices, Service Units, Hospitals, facilities, and Tribal/638 contracted health care facilities," to be located "throughout the United States."

Section C.1 of the solicitation set forth twenty-four pages of "Mandatory Specifications." The Mandatory Specifications called for three computer systems, denoted "A", "B", and "C", each to consist of a central processing unit (CPU), and more or less peripheral equipment, depending on the system. Section C. required that "each system proposed shall be based on a minimum sixteen (16) bit CPU architecture." During negotiations, one offeror requested the government to modify the solicitation to require, at a minimum, a thirty-two bit processor, "in order to provide a CPU architecture with the flexibility, power, and growth potential to handle" IHS's needs. The government did not concur with the recommended change, and, in a tersely worded response, maintained that a sixteen bit CPU would meet its requirements.

B. The July 29th Acceptance Test

The original solicitation made no mention of a post-award acceptance test. During negotiations, however, the government stated that successful completion of post-award acceptance tests was "required," and in an amendment to the solicitation, a section E.1.1.1 was added, entitled Post-award Acceptance Test, which read in part:

Successful completion of post-award acceptance tests is required. These tests will involve the execution of MUMPS applications programs and File Manager retrievals against a psuedo-patient data base, containing multiple types of demographic and medical data, of approximately 2500 patients.

Section E.1.1.1 also stated that various items necessary to run the tests and evaluate the results would be made available to interested offerors.

These items were made available in the form of the July 29, 1986 RPMS Acceptance Test. The test description explained:

The purpose of this document is to specify mandatory levels of system performance as measured by a series of acceptance tests.

The acceptance test consists of a number of timed applications running concurrently on the proposed computer system. Timing results are computed by the computer and displayed at the end of each task. [Our emphasis.]

Each system was to be tested, and the systems were required to complete each task within a specified average elapsed time, or response time.

C. The Award to SMS

On September 29, 1986, the contracting officer wrote a file memorandum on the course of the procurement which concluded:

It was determined that the offer submitted by SMS Data Products Group, Inc., was the offer most advantageous to the Government. As SMS had the lowest evaluated cost, submitted an acceptable technical proposal, and received a weighted evaluation score of 2.10 points higher than the next highest offeror, it was determined that negotiation would not result in a more advantageous offer.

In accordance with this conclusion, the contract was awarded to SMS on the following day.

D. The C3 Protest, the Stipulation and Agreement, and the November 24, 1986 Acceptance Test

C3, Inc. protested the award to SMS in the GSBCA, and SMS, Severn, and Computer Marketing Corporation (CMC), joined in the protest as intervenors. HHS was the named respondent.

On November 14, 1986, C3's protest was dismissed without prejudice pursuant to a Stipulation and Agreement to which SMS was not a party. The gist of the Stipulation and Agreement was that the government was obligated to create an enhanced acceptance test to administer to SMS, which was to include at a minimum certain items stated in an attachment to the document. If SMS failed the enhanced acceptance test, it was to be placed in default and the contract awarded to the next highest ranked offeror without any further negotiations, discussions, or opportunity for best and final offers. The acceptance testing procedures would then begin anew. The Stipulation and Agreement provided in part:

2. Upon receipt of the Board's Order and Dismissal approving this Stipulation and Agreement, Respondent shall prepare an Acceptance Test Plan pursuant to Section E.1.1.1. of Solicitation No. 282-86-0060. . . .

3. The Acceptance Test Plan shall test fully configured and fully operational Type A, B and C systems to insure that the offered systems fully comply with the mandatory requirements of the Solicitation . . . . As a minimum the Acceptance Test Plan shall include the Test requirements set forth in Attachment A hereto. ["Attachment A" set forth three pages of "changes and additions" to the original acceptance test.] The tests shall be performed within the time limits provided for in Section E.1.1.1, of the Solicitation.

4. . . . The[] systems to be tested by SMS shall be the same specific systems proposed by SMS . . . without change or alteration to model number, memory capacity or any other hardware, software or firmware feature or function as contained in the original SMS proposal accepted by Respondent.

The reference in paragraph 3 to "the time limits provided for in Section E.1.1.1." is significant because Section E.1.1.1 itself contained no limits, but merely referred to "maximum acceptable response times" to be provided upon request. These time limits were issued as part of the July acceptance test. Thus, the new tasks in the revised test were to be performed in the same amount of time allotted in the July test.

In accordance with the Stipulation and Agreement, HHS prepared an acceptance test dated November 24, 1986. The provisions added as a result of the settlement appeared for the most part in Section 2.6 of the November test. The changes in the test scenario were substantial. For example, the July test contained a timed test to be run on the A system in which a series of repetitive tasks were to be carried out concurrently on eighteen terminals connected to the CPU. The November version contained a similar test, but increased the number of terminals to twenty-two without allowing any added response time. Also, other peripheral equipment was added so that in the case of the November test, thirty-two input/output ports on the CPU would be in use instead of only eighteen in the case of the July test.

The change in the test scenario was an important factor which led to a decision by SMS to perform the acceptance testing on a dual 16-bit processor configuration, in contrast to the single 16-bit processor solution which SMS had initially proposed. Howard Sutphin, ...

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