Monroe Systems for Business, Inc.

B-271136 May 17, 1996 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights Most reasonable interpretation of clause is that warranty extends to equipment acquired under lease to ownership plan (LTOP). Is sustained since agency did not select vendor meeting its needs at the lowest overall cost. Monroe contends that its overall price for the photocopying equipment and associated maintenance is lower than Edgemont's and that it therefore should receive the award. Under the terms of which title and ownership of the equipment is transferred to the government without any additional payment at the conclusion of the specified lease period (in this case. A procuring agency is required to order from the schedule contractor offering the lowest overall price for products meeting its needs. View Decision Matter of: Monroe Systems for Business, Inc. File: B-271136 Date: May 17, 1996 Where contracting officer failed to seek clarification of warranty provision in protester's Federal Supply Schedule contract for photocopying equipment, and most reasonable interpretation of clause is that warranty extends to equipment acquired under lease to ownership plan (LTOP), protest against agency's price evaluation, which failed to give the protester credit for its warranty in an LTOP acquisition, is sustained since agency did not select vendor meeting its needs at the lowest overall cost. Attorneys DECISION Monroe Systems for Business, Inc. protests the decision by the Department of Veterans Affairs (VA) to award a lease for nine photocopiers for use at the VA Medical Center in Long Beach, California, to Edgemont Business Systems, a Sharp Electronics Corporation dealer. Monroe contends that its overall price for the photocopying equipment and associated maintenance is lower than Edgemont's and that it therefore should receive the award. We sustain the protest. After deciding to replace the nine photocopiers on a lease to ownership plan (LTOP) basis -- under the terms of which title and ownership of the equipment is transferred to the government without any additional payment at the conclusion of the specified lease period (in this case, 36 months)- -the contracting officer requested prices for the lease, installation, and maintenance [1] of appropriate machines from three vendors holding FSS contracts for photocopiers: Monroe, Edgemont, and Konica. Both Monroe and Edgemont submitted prices, while Konica responded that it did not offer an LTOP. The contracting officer determined that the copiers submitted by both Monroe and Edgemont would meet the medical center's needs and that price therefore would be the determinative factor in selection of an awardee. In this regard, when ordering from the FSS, a procuring agency is required to order from the schedule contractor offering the lowest overall price for products meeting its needs. Federal Acquisition Regulation (FAR) Sec. 8.404(b)(2), (c)(1); Imaging Technology Corp., B-270124, Feb. 12, 1996, 96-1 CPD para. 68. In calculating Edgemont's overall price, the contracting officer included only 33 months of maintenance since Edgemont had noted in its price proposal that "all copiers come with a 90 day warranty." In calculating Monroe's overall price, in contrast, the contracting officer included maintenance costs for all 36 months. As calculated on this basis, Edgemont's overall price was $1,596.80 lower than Monroe's ($81,349.92 vs. $82,946.72). On February 2, the contracting officer notified Edgemont that it had been selected for award. Monroe argues that the contracting officer erred in calculating its overall price. The protester asserts that it, like Edgemont, offered a 90-day warranty on the copiers -- and that the contracting officer therefore should have included maintenance costs for only 33 months in calculating its overall price, as she did in calculating Edgemont's. The protester maintains that its price, as correctly calculated, is $81,326.72, i.e., $23.20 less than Edgemont's. The contracting officer responds that she did not interpret the warranty provision in Monroe's FSS contract as applying to LTOP acquisitions. She contends that her interpretation is consistent with the view of a GSA contracting officer responsible for administering photocopier contracts that unless the terms of a vendor's FSS contract explicitly extend the vendor's warranty to equipment acquired under an LTOP, the warranty is presumed to apply to purchased equipment only. The VA contracting officer further argues that it is reasonable to require an explicit extension of the warranty to LTOP acquisitions given the FSS contract provision committing the government "to maintain the leased equipment while under LTOP." The warranty provision, in the General Terms and Conditions section of Monroe's FSS contract, states as follows: "Monroe warrants to the [g]overnment that the equipment delivered under this Agreement will at the time of delivery be free of defects of manufacture.