Data General Corp. v. Johnson, 95-1208

• Decision Date: 29 February 1996
• Docket Number: No. 95-1208,95-1208
• Citation: 78 F.3d 1556
• Parties: 40 Cont.Cas.Fed. (CCH) P 76,943 DATA GENERAL CORPORATION, Appellant, v. Roger W. JOHNSON, Administrator, General Services Administration, Appellee, and International Business Machines Corporation, Intervenor.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1556

78 F.3d 1556

40 Cont.Cas.Fed. (CCH) P 76,943

DATA GENERAL CORPORATION, Appellant, v. Roger W. JOHNSON, Administrator, General Services Administration, Appellee and International Business Machines Corporation, Intervenor.

No. 95-1208.

United States Court of Appeals Federal Circuit.

Feb. 29, 1996.

Rehearing Denied; Suggestion for Rehearing In Banc Declined

May 7, 1996.

Appealed from Board of Contract Appeals General Services Administration.

Richard J. Webber, Arent Fox Kintner Plotkin & Kahn, Washington, D.C., argued, for appellant.

Dean L. Grayson, Attorney, Commercial Litigation Branch, Department of Justice, Washington, D.C., argued, for appellee. With him on the brief were Frank W. Hunger, Assistant Attorney General and David M. Cohen, Director. Also on the brief were George Barclay, Michael Ettner, Roger Waldron, Pamela Reiner and Jody Burton, Office of General Counsel, General Services Administration, of counsel.

Thomas Humphrey, Crowell & Moring, Washington, D.C., argued, for intervenor. With him on the brief were L. Graeme Bell, III, Devon S. Engel and Jacqueline E. Hand, of counsel.

Before NEWMAN, Circuit Judge, FRIEDMAN, Senior Circuit Judge, and SCHALL, Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge FRIEDMAN.

Dissenting opinion filed by Circuit Judge NEWMAN.

FRIEDMAN, Senior Circuit Judge.

The appellant, Data General Corporation (Data General), challenges the decision of the General Services Administration (GSA) Board of Contract Appeals (Board), denying its protest of GSA's award of a contract to International Business Machines Corporation (IBM). Data Gen. Corp. v. General Servs. Admin., GSBCA 13092-P, 13098-P, 1995 Board Cont. Appeals Bid Protest Decisions (Federal Publications Inc.) p 48, 1995 WL 80010 (Feb. 6, 1995). The principal issue is whether the Board correctly held that Data General was not entitled to relief because it did not show that it had suffered prejudice as a result of any alleged improprieties in the procurement process. We affirm.

I.

In 1992, GSA solicited proposals to provide extensive automatic data processing equipment and related supplies and services for the United States Forest Service. Id. at 3.

The solicitation stated that the proposals would be separately evaluated with respect to technical and cost factors. The technical evaluation would be based upon four items, each of which was further subdivided. Id. The solicitation stated that the agency's source selection authority " 'will determine the proposal which provides the best overall value to satisfy Government needs' " and that the technical assessment would be "significantly more important" than cost. Id. at 4.

GSA designated five companies that submitted proposals as within the competitive range. Id. at 4-5. These companies were IBM, Data General, Hewlett-Packard, GDE Systems, Inc. (GDE), and Digital Equipment Corporation (Digital). Each of them had further discussions with GSA, and then submitted its best and final offer (BAFO). Id. at 5-6.

Upon review of the companies' submissions, a GSA contracting officer noted several pricing discrepancies in IBM's BAFO. Id. at 6-8. Specifically, the tables showing special pricing provisions (B tables) provided for beginning dates for two discounts that differed from the dates indicated in another table that showed expected contract life cycle cost (L table) and in the automated files IBM submitted with its BAFO. Id. at 8. The beginning dates of these discounts had a substantial effect on the overall cost of the proposal.

The contracting officer by telephone requested IBM to give two yes-or-no answers about what the dates should be:

Question 1:

[Redacted]

Your B-Table, special pricing provision, states that the effective date for the first discount is 1 Oct [redacted].

Your automated files are based on an effective date beginning 1 Oct [redacted] (Fiscal year [redacted].

Should special pricing provision state that the effective date for the first discount is 1 Oct [redacted] (Fiscal year [redacted]?

Yes or No

Question 2:

[Redacted] B-Table, special pricing provisions, state that the effective date for the first discount is 1 Oct [redacted].

Your automated files are based on an effective date beginning Feb [redacted].

Should special pricing provision state that the effective date for the first discount is 1 Oct [redacted] (Fiscal year [redacted]?

Yes or No

Id. at 8-9. IBM orally answered the first question "no" and the second question "yes." Later the same day, however, IBM changed its answer to the first question to "yes." Id. at 9. The final answers resulted in a substantially lower overall contract cost than would have resulted under the dates stated in the B tables.

Applying the revised beginning-discount dates to IBM's proposal, GSA then compared the BAFOs of the five companies with respect to both the cost and the technical areas. Data General's BAFO was substantially higher than IBM's. Data General's technical score was slightly higher than IBM's. Although the GSA source selection authority deemed the technical area "significantly more important than the Cost Area," id. at 10, it concluded that "IBM provides the best overall value to satisfy the Government's needs." Id.

GSA awarded the contract to IBM in June 1994. Id.

Digital then filed a protest with the Board challenging the award on various grounds. GDE and Data General intervened on the side of the protester, but Data General later voluntarily withdrew its intervention. Id. at 10-11. While the protests were pending, the government supplemented the analysis supporting the award with a cost/technical tradeoff report. Id. at 10. This report, dated July 28, 1994, " 'is to provide additional detail to the items considered in doing the price vs. technical tradeoff for the SSAC [Source Selection Advisory Council].' The report elaborates upon quantifiable and non-quantifiable differences between IBM and the then-parties to the protest, D[igital] and GDE. The report calculates the projected additional costs to the Forest Service over the life of the contract for implementing the systems of D[igital] and GDE as opposed to those of IBM." Id. at 10-11 (citation omitted).

On August 5, 1994, GSA moved to dismiss the protest. The motion stated:

GSA stipulates that the contract [with IBM] was awarded in violation of Federal Acquisition Regulation § 15.612(d). GSA stipulates that Digital and GDE have succeeded as to a significant issue and should be deemed the prevailing parties and awarded reasonable and documented attorney fees and costs of pursuing the protests.

Id. at 11.

The Board dismissed the protest with prejudice, stating that "[n]o party has asked to submit the matter on the record," "introduced an admission which would enable the Board to grant the protest," or "suggested an alternate resolution given the state of proceedings and of the procurement. No party has offered a basis to deny the motion to dismiss with prejudice." Id.

GSA then terminated the contract with IBM "for the Government's convenience." Id. It issued to the five companies, effective October 6, 1994, an amendment to the solicitation which provided for a second set of proposals, negotiations and BAFO submissions. Id. at 11-12. This amendment led to renewed protests by four of the five companies, including Data General. GSA withdrew the amendment and the protests were dismissed on November 10, 1994. Id. at 12.

On November 23, 1994, GSA "reinstated" the contract it had awarded to IBM in the original procurement. Id. at 13. The GSA source selection authority testified that that decision "was based on the initial comparative best value analysis contained in the June 14, 1994 Source Selection Advisory Council Analysis Report as supplemented by the July 28, 1994 Cost/Technical Tradeoff Report."

Following the reinstatement, on November 30, 1994, Data General filed the protest that is the subject of this case. Id. at 2. The protest challenged the reinstatement of the contract on two grounds: First, the inquiry by the contracting officer to IBM about the beginning date of the discounts after the submission of BAFOs was an impermissible "discussion" that allowed IBM to revise its BAFO without giving the other companies an opportunity to do so. Second, GSA should be estopped from denying that it violated 48 C.F.R. § 15.612(d) (1994), as it had admitted during the first round of protests, and that as a result the reinstatement was illegal.

The Board rejected both arguments. It held that "[a]ny improprieties in the clarification/discussion process have not prejudiced [Data General]. Accordingly, the agency was not required to reopen discussions prior to award." Data Gen. Corp., 1995 Board Cont. Appeals Bid Protest Decisions (Federal Publications Inc.) at 17. The Board further ruled that GSA was not estopped from denying illegality in the reinstatement of the contract "[b]ecause the earlier stipulation does not demonstrate an agency violation of statute or regulation in its November actions." Id. at 15. The Board stated that "the position of the agency in the stipulation is not inherently inconsistent with its position in this protest," because "[a]t issue in the first protest was the propriety of the selection and 'best value' determination regarding IBM compared to D[igital] and GDE," not compared to Data General. Id.

II.

Both the government and IBM contend that the part of Data General's protest that challenges GSA's telephonic inquiry to IBM regarding the beginning date of IBM's discounts was untimely under the Board's regulations and that the Board therefore had no jurisdiction over it. They rely on a Board regulation stating that protests of this type must "be filed no later than 10 working days after the basis for the ground of protest is known or should have been known." 48 C.F.R. § 6101.5(b)(3)(ii) (1994). They contend that because Data General knew, or should have known, of the allegedly...