Data General Corp. v. U.S., 90-1264

• Decision Date: 09 October 1990
• Docket Number: No. 90-1264,90-1264
• Citation: 915 F.2d 1544
• Parties: 36 Cont.Cas.Fed. (CCH) 75,949 DATA GENERAL CORPORATION, Appellant, v. The UNITED STATES, Appellee, and SMS Data Products Group, Incorporated and Lockheed Missiles & Space Company, Inc., Intervenors-Appellees.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1544

915 F.2d 1544

36 Cont.Cas.Fed. (CCH) 75,949

DATA GENERAL CORPORATION, Appellant, v. The UNITED STATES, Appellee, and SMS Data Products Group, Incorporated and Lockheed Missiles

& Space Company, Inc., Intervenors-Appellees.

No. 90-1264.

United States Court of Appeals, Federal Circuit.

Oct. 9, 1990.

Richard J. Webber, Arent, Fox, Kintner, Plotkin & Kahn, Washington, D.C., argued for appellant. With him on the brief were Matthew S. Perlman and Bruce J. Moldow.

Joan M. Bernott, Sp. Litigation Counsel, Commercial Litigation Branch, Dept. of Justice, Washington, D.C., argued for appellee. With her on the brief were Stuart M. Gerson, Asst. Atty. Gen., and David M. Cohen, Director.

Cyrus E. Phillips, IV, McGuire, Woods, Battle & Boothe, Washington, D.C., argued for intervenors-appellees. E. Sanderson Hoe, McKenna, Conner & Cuneo, Washington, D.C., argued for intervenors-appellees. With him on the brief were John B. Dale and Charlotte D. Young. Also on the brief was Laurence Fedak, Lockheed Missiles & Space Co., Inc., Fairfax, Va., of counsel.

Before MARKEY, Circuit Judge, MILLER, Senior Circuit Judge, and MAYER, Circuit Judge.

OPINION

MAYER, Circuit Judge.

Data General Corporation appeals the decision of the General Services Administration Board of Contract Appeals (board) granting the protest of SMS Data Products Group, Inc. (SMS) in full, and that of Lockheed Missiles & Space Company, Inc. (Lockheed), consolidated with SMS's protest, in part. SMS Data Prod. Group, Inc., GSBCA Nos. 10468-P, 10474-P, 90-2 B.C.A. (CCH) p 22,799, 1990 WL 31888 (Mar. 15, 1990). We reverse.

Background

The United States Department of the Interior, United States Geological Survey (USGS or agency) issued Solicitation No. 7510 on February 10, 1989. Over the seven year life of the contract proposed, the agency intended to purchase, primarily for its Water Resources Division (WRD), in excess of $125 million of automated data processing equipment, including computational workstations and other processors, peripheral hardware, software, training, support, and maintenance. The WRD is the principal federal water-data agency and is heavily dependent on information systems to fulfill its mission. Systems procured under the instant "DIS II" solicitation are intended to complement and enhance the WRD's existing Distributed Information System (DIS I), which is used to acquire, process, and store in geographic information systems enormous quantities of hydrologic data, to prepare and publish reports, and to support administrative applications.

Because the WRD employs over 4,000 people in more than 200 office locations throughout the United States, and because both the size and needs of individual WRD offices vary widely, the agency stressed in the solicitation its desire for flexibility in configuring and using the systems to be procured. In particular, the solicitation provides in section C.1.4 that "[i]ndividual systems will be custom-configured by the Government at the time each is purchased," and "[e]ach location acquiring a system may have a unique configuration, but the family of components comprising all possible systems will be common." Components to be purchased under the contract include computational workstations, each having a graphics display, keyboard, and mouse; additional processors to serve as computational or file servers; and peripheral hardware necessary, for example, to network both individual workstations and independent systems. Each "system" includes these hardware components as well as attendant software: "the total complement of hardware and software acquired for one location."

The solicitation requires that certain hardware external to the systems--for example, data gathering and output devices located in field or office, and interactive dumb terminals (IDTs), which do not themselves process information but allow their users to access and operate components of the systems--nevertheless interface and communicate with them. Similarly, systems acquired under the solicitation must be capable of communicating interactively with one another as well as processing information and using software resident on existing WRD systems. Chief among these is the DIS I, which consists of 71 Prime computers with a common operating system, common hardware functionality, and common interconnection to the agency's GEONET network.

The contractor must provide the additional hardware and software necessary to meet these connection requirements. For example, the solicitation specifies that each workstation be equipped with at least two asynchronous communications ports to accommodate IDTs, data gathering devices, data output devices, and the like. Each workstation also must have a minimum of three synchronous communications ports to allow networking. Individual DIS II system components must be connected to each other and to local DIS I hardware, like IDTs, via a Local Area Network (LAN). Remote LANs are in turn connected by wide area networks (WANs). Finally, remote WANs are connected with each other and with remote DIS I equipment via GEONET, the USGS global communications network.

The complexity of the DIS II system, and the impossibility of precisely predicting the agency's future information processing needs, dictate that USGS retain the ability to configure individual systems as local needs and unforeseen circumstances require. For instance, in small WRD offices, workstations might be able to share information processing with a computational or file server, thereby more effectively accomplishing assigned tasks. But the same approach could prove unworkable in large WRD offices, where larger numbers of users could render the link between workstations and server a "bottleneck." In this situation, an alternative solution is to provide each workstation with the necessary data storage and/or processing capability to do the job alone. To accommodate these and other possible system configurations, the solicitation requires very broad software licenses. In particular, vendors must offer licenses allowing all software to be executed simultaneously both on all processors and by all users--unlimited use site licenses. This requirement is the focus of the case.

To be technically acceptable, an offeror's system had to satisfy the technical requirements contained in section C of the solicitation, which includes the licensing provision, as well as successfully complete a benchmark test. The solicitation makes clear that the agency intended to use the benchmark "for the purpose of cost evaluation and testing" only: this or similar language is used no fewer than seven times to describe the benchmark. Attachment H to the solicitation describes the benchmark in detail; it required vendors to assemble and demonstrate the capabilities of four computer systems, consisting of 5, 15, 30, and 60 workstations, respectively. In each system, only a single user was assigned to each workstation. Although vendors could use additional processors to function as computational or file servers, none of the specified systems included or interfaced with external hardware and none was connected to another benchmark system. Only the individual workstations within each system were networked.

Data General, SMS, and Lockheed each submitted initial proposals that met the requirements of section C and passed the benchmark. Since the three received nearly identical overall technical scores, the contracting officer informed them prior to the submission of best and final offers (BAFOs) that price would control award. SMS subsequently submitted the lowest-priced offer, Data General the second-lowest, and Lockheed by far the highest. But the contracting officer disqualified SMS from the competition because, among other reasons, she determined that SMS had altered its initial proposal in two critical respects that rendered it technically noncompliant.

First, SMS proposed to split the licensing of some of its database software between workstations and servers--a "front-end back-end" approach to licensing in which one portion of a software package is licensed only for the workstations in a system and the remainder is licensed only for the servers. The contracting officer considered this a violation of the requirement that all software be licensed for all processors. Alternatively, the contracting officer found that if SMS allowed the agency to purchase full licenses for both workstations and servers, its total price would exceed Data General's. In either case, SMS was not entitled to award.

Second, in a letter sent to the contracting officer the day following submission of its BAFO, SMS "clarified" that it intended to license its software according to the number of users per system rather than the number of processors per system, as stated in its BAFO. Unlike the latter approach, in which all users of a processor are entitled to use the software licensed for that processor simultaneously, in SMS's user-based approach only a specified number of users can execute the software regardless of the number of processors to which they have access. In response to a draft SMS licensing agreement, submitted the day before BAFOs were due, the contracting officer had specifically warned SMS that the approach was unacceptable. In her view, it did not satisfy the requirement for unlimited use site licenses because SMS had not tried to determine or offered to license the maximum possible number of users of each system. Moreover, the number of users of a real system would vary and therefore be difficult to determine; generally, there would be more than the one user per workstation SMS assumed in its pricing. So even if SMS agreed to license more users per system than the number specified for the benchmark, the contracting officer concluded it would be too difficult to determine the number of licenses to purchase.

Accordingly, the contracting officer disqualified SMS from the...