THIS OPINION WAS INITIALLY ISSUED UNDER PROTECTIVE ORDER AND IS BEING RELEASED TO THE PUBLIC IN ITS ENTIRETY ON OCTOBER 29, 1993 ____________________________________________________________ DISMISSED FOR LACK OF AN INTERESTED PARTY: October 19, 1993 ____________________________________________________________ GSBCA 12543-P HSQ TECHNOLOGY, INC., Protester, v. NATIONAL AERONAUTICS AND SPACE ADMINISTRATION, Respondent. Donald O. Pratt and Paul H. Sanderford of Canterbury, Stuber, Pratt, Elder & Gooch, Dallas, TX, counsel for Protester. Sumara M. Thompson-King, Office of the General Counsel, National Aeronautics and Space Administration, Washington, DC; and Jeremy Becker-Welts, Office of the Chief Counsel, National Aeronautics and Space Administration, Hampton, VA, counsel for Respondent. Before Board Judges DEVINE, BORWICK, and DeGRAFF. DeGRAFF, Board Judge. On May 21, 1993, the National Aeronautics and Space Administration (NASA) issued solicitation 1-121-5690.0665, which requests proposals to supply the hardware and software necessary to upgrade the utility control system (UCS) at the Langley Research Center in Hampton, Virginia. Protest File, Volume I, Exhibit A. The UCS monitors and controls the heating, ventilating, and air conditioning systems for nineteen major buildings at the research center. Transcript at 230. NASA received proposals from three vendors in response to the solicitation. Protester, HSQ Technology, Inc. (HSQ), offered the lowest price of $336,342.00. Protest File, Volume IV. The awardee, Dorsett's, Inc. (Dorsett's), offered a price of $461,069.33. Protest File, Volume II, Exhibit B. The third offeror submitted two proposals, priced at $496,545.00 and $487,545.00. Protest File, Volume II, Exhibit A-4. HSQ filed this protest when it learned that NASA intended to award the UCS contract to Dorsett's. In its third amended complaint, HSQ alleges that 1) NASA should have performed a technical/cost trade-off analysis; 2) NASA's technical evaluator was not sufficiently experienced to evaluate HSQ's proposal properly; 3) NASA should have conducted discussions with offerors; 4) NASA provided Dorsett's with an unfair competitive advantage in both technical and cost areas; and 5) NASA did not properly conduct an analysis of Dorsett's price and so could not determine which proposal was most advantageous to the Government. HSQ was not eligible for contract award, because HSQ did not propose to fulfill NASA's requirements. Instead, HSQ proposed to supply a system that failed to meet several mandatory requirements of NASA's statement of work. For this reason, HSQ is not entitled to pursue this protest and the protest is dismissed. Findings of Fact Developing The Solicitation NASA's Technical Project Engineer (TPE) was responsible for preparing the statement of work for this solicitation. Transcript at 14. He began by collecting several statements of work from contracts entered into by other Government facilities for UCS upgrades and replacements, and he used these to prepare a draft statement of work for this procurement. The TPE provided this draft to the UCS users in order to obtain their ideas. Id. at 236-38. The TPE prepared several drafts of the statement of work, obtaining input from his supervisor, an engineering contract specialist, an individual from another NASA facility, the contract specialist, and the contracting officer. Transcript at 236-38. HSQ's president testified that he recognized the statement of work as having been issued by the Army Corps of Engineers ten years ago. It is certainly possible that the Corps' statement of work resembles the statement of work prepared by the TPE, given that the TPE based his initial draft upon other Government contracts. Id. at 298, 307. The contract specialist and the contracting officer reviewed the statement of work in order to ensure that competition for the procurement would not be limited and that the solicitation contained no restrictive requirements. In keeping with this goal, NASA decided to permit offerors to choose among upgrading the UCS, replacing the UCS, or partially replacing the UCS. Transcript at 96-97, 355. Because the statement of work had been prepared by the engineering division which, in the contracting officer's experience, is very adept at preparing detailed specifications, the contracting officer considered whether to issue the solicitation as an invitation for bids or as a request for proposals. The contracting officer decided to issue a request for proposals because he and the contract specialist anticipated having to negotiate software licensing requirements. Id. at 97, 200, 355. After the contracting officer decided to issue a request for proposals, he had to decide which contract clauses to include in the solicitation. He discussed the possibilities with the contract specialist and they determined that, because the requirements set forth in the statement of work were very clear, a technical evaluator would simply have to compare those requirements with the contents of offerors' proposals and determine whether the requirements were met. In other words, a technical evaluator would be required to make a comparison, rather than exercise any judgment as to relative merits of proposals. Transcript at 90, 356-57. Contents Of The Solicitation As explained above, the contracting officer and the contract specialist believed that the requirements set forth in the statement of work were very clear. As a result, they informed offerors that NASA would evaluate proposals by using the "Simplified Evaluation Method," and directed offerors to prepare their proposals accordingly. Sections L and M of Part IV of the solicitation contain the following provisions, which explain the "Simplified Evaluation Method." SECTION L - INSTRUCTIONS, CONDITIONS, AND NOTICES TO OFFERORS * * * * L.13 CONTRACT AWARD (FAR 52.215-16) (JUL 1990) -- ALTERNATE III (AUG 1991) (a) The Government will award a contract resulting from this solicitation to the responsible offeror whose offer conforming to the solicitation will be most advantageous to the Government, cost or price and other factors, specified elsewhere in this solicitation, considered. (b) The Government may (1) reject any or all offers if such action is in the public interest, (2) accept other than the lowest offer, and (3) waive informalities and minor irregularities in offers received. (c) The Government intends to award a contract without discussions with offerors. Therefore, each initial offer should contain the offeror's best terms from a cost or price and technical standpoint. However, the Government reserves the right to conduct discussions if later determined by the Contracting Officer to be necessary. * * * * L.30 PROPOSAL PREPARATION INSTRUCTIONS - SIMPLIFIED EVALUATION METHOD In order to facilitate proposal evaluations, your proposal should include adequate details to verify that all requirements as defined in the RFP's specifications/Statement of Work are met. Your proposal shall include detailed information, including descriptive product literature as applicable, sufficient to unequivocally confirm that each requirement of the specifications/Statement of Work is completely met. Protest File, Volume I, Exhibit A. Section M of the solicitation reads, in its entirety: SECTION M - EVALUATION FACTORS FOR AWARD M.1 EVALUATION AND SELECTION - SIMPLIFIED EVALUATION METHOD A. All proposals will be evaluated for compliance with the specifications set forth in the Statement of Work. Proposals which do not clearly meet each requirement of the specifications will be rejected. Accordingly, proposals should include adequate details to verify that all specifications are met. Proposals which do not include fixed prices cannot be considered and will be rejected. B. The responsible offeror proposing acceptable item(s) at the lowest total aggregate price will be selected for negotiation leading to contract award. Protest File, Volume I, Exhibit A. The solicitation's statement of work consists of sixty-nine pages of detailed requirements for the components of the utility control system. Only a few of these requirements are important to the resolution of this protest. In section 1.0 of the statement of work, NASA defines the scope of work as "providing all labor, parts, and materials to upgrade the Langley Research Center Utility Control System (UCS) to meet the performance and design requirements specified herein and to be fully functional." Section 1.0 also provides that all of the existing UCS's capabilities had to be preserved or improved as delineated in the statement of work. In section 1.4, NASA explains that an offeror could propose to upgrade the existing UCS, to replace the existing UCS, or to replace part of the existing UCS. Protest File, Volume I, Exhibit A. Section 4 of the statement of work is titled, "System Description." Section 4.9 provides that the system "shall have full, transparent interfaces with at least two direct digital control system manufacturers. The interfaces shall consist of common compatible protocol and exchanged [sic] with common engineering units easily available to the operators." Protest File, Volume I, Exhibit A. Section 11 of the statement of work is titled, "Field Equipment." Section 11.5.5.3 provides that each latching relay's "[o]perating time shall be 20 milliseconds or less, with release time of 10 milliseconds or less." Protest File, Volume I, Exhibit A. Section 12 of the statement of work is titled, "System Equipment." Sections 12.7.1, 12.7.2, and 12.7.3 address disk storage systems. These three sections require a primary rigid disk system and an identical backup rigid disk system, each "having a maximum average seek time of 17 milliseconds," and consisting of one disk drive. Section 12.9 requires two operator's terminals, one data collection terminal, one system terminal, and one PC operator's terminal. Protest File, Volume I, Exhibit A. Also contained in section 12 of the statement of work is section 12.11, which requires a magnetic tape system that exhibits the following characteristics: Provide high performance 1/2-inch streaming tape drive backup. The tape drive shall be equipped with an autoload feature that accommodates any standard size tape reel from 6 to 10-1/2 inches. The tape drive shall operate with both 6250 cpi (characters per inch) and 1600 cpi industry standard densities. Operating with 6250 cpi density, the tape unit shall be rated for a tape drive transfer rate of 751 Kilobytes. Internal buffer size shall be minimum of 512 kilobytes. Read/write speed shall be 125 ips. Minimum data capacity shall be 140 megabytes per 2,400 foot reel at 6250 cpi. Sections 13.1 and 13.15 of the statement of work contain requirements identical to the requirements contained in sections 4.9 and 12.9 of the statement of work. Section 14 of the statement of work requires certain command software for the UCS. Section 14.1.4.1 requires the operator's console commands to provide the means for entry of commands and for retrieving UCS information, and to perform certain tasks. Protest File, Volume I, Exhibit A. Technical Evaluation The TPE reviewed each proposal in order to determine whether it unequivocally confirmed that each requirement of the statement of work was met. Transcript at 53-54. The TPE determined that the Dorsett's proposal met the requirements of the statement of work, and that the third offeror's proposals did not. Protest File, Volume I, Exhibit B. The TPE decided that HSQ's proposal did not meet the requirements of sections 4.9 or 13.1, because the proposal does not state that HSQ's system would have the specified interfaces with at least two direct digital control system manufacturers. Protest File, Volume I, Exhibit B. HSQ's proposal states, in response to section 4.9, that HSQ intended to supply a particular graphical user interface that was rapidly becoming a standard interface for computers manufactured by DEC, Sun, Hewlett- Packard, and IBM. The "Executive Summary" section of HSQ's proposal states that HSQ was proposing an "open systems environment" that was flexible enough to permit NASA to integrate other computer applications and to expand the system. Id., Volume III. In its responses to NASA's discovery, HSQ stated that its proposal was not required to name any system manufacturer with which HSQ's system would interface. HSQ also stated that it has a transparent interface to Allen-Bradley PLCs, Modicon PLCs, and ASI Controls. Respondent's Supplemental Protest File, Exhibit 1. The TPE decided that HSQ's proposal did not meet the requirements of section 11.5.5.3, because the proposal states that HSQ will provide latching relays with operating and release times of 25 milliseconds. Protest File, Volume I, Exhibit B. The statement of work required an operating time of 20 milliseconds or less and a release time of 10 milliseconds or less. Protest File, Volume I, Exhibit A. HSQ stated that this requirement cannot be met. Transcript at 306-07. The TPE decided that HSQ's proposal did not meet the requirements of sections 12.7.1, 12.7.2, and 12.7.3, because the proposal states that HSQ will provide a disk system with eight disk drives and a maximum average seek time of 19 milliseconds. Protest File, Volume I, Exhibit B. The statement of work required a disk system with two disk drives (one for the primary system and one for the backup system) and a maximum average seek time of 17 milliseconds. Id., Volume I, Exhibit A. The TPE determined that HSQ's proposal did not meet the requirements of sections 12.9 or 13.15, because the proposal states that HSQ will provide four terminals instead of the five terminals required by the statement of work. Protest File, Volume I, Exhibits A and B. In HSQ's view, it was not necessary to supply the dedicated system terminal required by sections 12.9 and 13.15. Transcript at 158. There are two primary users of the system, and three more individuals support the users. The users required the fifth terminal because there may be times when other terminals are not available. Transcript at 230, 250-51; Respondent's Supplemental Protest File, Exhibit 4, page 2 of 7. The TPE determined that HSQ's proposal did not meet the requirements of section 12.11, because the proposal states that HSQ will provide a cartridge type tape unit instead of the specified reel-to-reel type unit, and that HSQ's unit will not meet either the specified densities or transfer rates. Protest File, Volume I, Exhibit B. HSQ agrees. Transcript at 160, 182. HSQ also described the equipment specified by NASA as a "very expensive piece of hardware." Id. at 159. Finally, the TPE determined that HSQ's proposal did not meet the requirements of section 14.1.4.1, because HSQ's proposal does not contain any response to that section. Protest File, Volume I, Exhibits A and B. The TPE is correct. Id., Volume III. The TPE testified that HSQ supplied several manuals with its proposal and that he reviewed these manuals and could not determine that they addressed section 14.1.4.1. Transcript at 71-73. HSQ's expert witness testified that he assumed that one of the manuals addressed the section. He based his opinion upon a review of the title pages of the manuals and not upon a review of the manuals themselves. Id. at 161-62, 183. HSQ acknowledges that its proposal was not "fully responsive" and "did not unequivocally meet every requirement of the [statement of work]." HSQ's Post-Hearing Brief at 29-30. In its proposal, HSQ took exception to several items contained in the statement of work, and proposed several items which were different from the items required by NASA. Transcript at 300; Respondent's Supplemental Protest File, Exhibit 1. HSQ believed that the statement of work had been prepared by the Corps of Engineers and had not been edited by NASA for use in this procurement. HSQ decided, therefore, that several of the statement of work's requirements were "not part of this particular contract," were not "required for the project," and had "no application in this particular project." Transcript at 306-08. Before submitting its proposal, HSQ did not request or recommend that NASA alter any of the requirements of the statement of work and did not complain to NASA that any of the requirements were unnecessary, inappropriate, or impossible to meet. Id. at 360. There is no evidence to suggest that HSQ would have ever been willing or able to submit a proposal which met all of NASA's requirements. No such evidence was elicited by HSQ, which did not call anyone associated with HSQ to testify during its case in chief. NASA called HSQ's president to testify; he stated that he believed that HSQ met the "intent" of the specifications, that HSQ was offering NASA a "superior" system, and that HSQ was offering a system that would have operated "satisfactorily." Transcript at 310-12. Although HSQ's president testified that he wished NASA had conducted discussions before award, he did not state that HSQ would have altered its proposal in order to meet NASA's requirements. Id. at 301-02, 309. Instead, he testified that, if HSQ had been able to discuss its proposal with NASA, HSQ would have taken the opportunity to clarify for NASA the "changes that we recommended in the specification." Id. at 331. Selection of Awardee The TPE prepared a memorandum for the contract specialist, which contained the TPE's evaluation of the offeror's technical proposals. Protest File, Volume I, Exhibit B. The contract specialist and the contracting officer recommended to counsel's office that award be made to Dorsett's because, although HSQ proposed the lowest price, HSQ's proposal took exception to some of the statement of work's requirements, and Dorsett's proposed the second-lowest price. Transcript at 86-89, 209-10; Protest File, Volume I, Exhibit C. The contracting officer knew that he could conduct discussions with offerors, if discussions were necessary. He decided that discussions were not necessary, for the following reasons. Sections L and M of the solicitation explained that offerors were required to confirm unequivocally that they would meet the requirements of the statement of work. In addition, Sections L and M explained that a proposal which failed to contain such a confirmation would be rejected. The contracting officer knew that he had one proposal which took no exceptions to the statement of work's requirements, and two proposals which were deficient. If discussions had been held, the contracting officer would have been obligated to conduct discussions with all offerors, including Dorsett's. In the contracting officer's view, such "discussions" would have been discussions in name only because there would have been nothing to discuss with Dorsett's, given that it had supplied a technically compliant proposal. He decided that, given the nature of the deficiencies contained in the proposals of HSQ and the third offeror, any "discussions" with them would have resulted in his identifying weaknesses in their proposals and then providing solutions to cure those weaknesses. The contracting officer knew that he could waive "minor informalities" in a proposal. But, in his opinion, the deficiencies contained in HSQ's proposal did not amount to minor informalities. Instead, portions of HSQ's proposal simply failed to meet the requirements of the statement of work. Transcript at 118-25, 132-37, 364-65. The contract was awarded to Dorsett's on August 6, 1993. NASA notified HSQ of the award that same date, and this protest followed. Protest File, Volume I, Exhibits E and G. Discussion Pursuant to 40 U.S.C. 759 (1988), the Board possesses jurisdiction to consider a protest filed by an interested party in connection with a procurement. The term "interested party" is defined at 40 U.S.C. 759(f)(9)(B) as "an actual or prospective bidder or offeror whose direct economic interest would be affected by the award of the contract or by failure to award the contract." Because an agency cannot award a contract to an offeror who does not propose to fulfill mandatory requirements of a solicitation, such an offeror lacks an economic interest in the award of a contract and is not an interested party to pursue a protest. Integrated Systems Analysts, Inc., GSBCA 10750-P, 91-1 BCA 23,383, 1990 BPD 298. It is clear that, in its proposal, HSQ did not intend to provide latching relays with the operating and release times required by NASA, a disk system with the required number of disk drives or the required seek time, the required number of terminals, or a reel-to-reel tape unit with the required densities and transfer rates. HSQ believed that it was impossible to meet the latching relay requirement. In addition, HSQ did not establish that its proposal fulfills NASA's requirements for interfaces with other direct digital control system manufacturers, or whether it fulfills the requirements of section 14.1.4.1 of the statement of work. Although HSQ believes that its proposed system would have operated well and would have fulfilled NASA's needs, it was NASA's exclusive right to determine its needs and to set forth the requirements for meeting those needs. There is no doubt that the system proposed by HSQ does not fulfill all of NASA's requirements. NASA asserts that, when it states in a solicitation that it intends to award without discussions, an offeror who submits an imperfect proposal cannot be in line for award and so is not entitled to pursue a protest of NASA's award decision. According to NASA, the deficiencies in HSQ's proposal demonstrate that HSQ was not eligible for award and so, NASA maintains, we may not give any further consideration to this protest because HSQ is not an interested party to pursue it. NASA's Post-Hearing Brief at 34. In order to resolve this protest, it is not necessary for us to decide whether NASA's view is correct. Here, in addition to the fact that HSQ's proposal was deficient, it became apparent at the hearing that HSQ would not have amended its proposal in order to fulfill NASA's requirements, even if NASA had conducted discussions. HSQ believes that not all of NASA's stated requirements are necessary or capable of being met and if NASA had conducted discussions, HSQ would have used that opportunity only to clarify its recommended changes to the specifications. If HSQ wished to recommend that NASA change its specifications, it should have done so before it submitted its proposal. After proposals were submitted, HSQ was eligible for award only if it was willing and able to fulfill all of NASA's mandatory requirements. HSQ has not established that, if NASA had conducted discussions, HSQ would have submitted an amended proposal which met those requirements. HSQ is not a potential candidate for award because its proposal failed to meet several mandatory requirements contained in the statement of work. HSQ also did not establish that it was willing or able to amend its proposal in order to meet any of those requirements. Because HSQ is not a potential candidate for award, it lacks a direct economic interest in the award of the contract and it is not an interested party to maintain this protest. Decision The protest is DISMISSED, for lack of an interested party. ___________________________ MARTHA H. DeGRAFF Board Judge We concur: _____________________________ ___________________________ DONALD W. DEVINE ANTHONY S. BORWICK Board Judge Board Judge