ViON Corporation

ViON Corporation BNUMBER: B-275063.2; B-275069.2 DATE: February 4, 1997 TITLE: ViON Corporation ********************************************************************** Matter of:ViON Corporation File: B-275063.2; B-275069.2 Date:February 4, 1997 David R. Hazelton, Esq., and David E. Ross, Esq., Latham & Watkins, for the protester. Robert J. Moss, Esq., Dickstein, Shapiro, Morin & Oshinsky LLP, for Severn Companies, Inc., an intervenor. Robert R. Goff, Esq., Defense Information Systems Agency, for the agency. Guy R. Pietrovito, Esq., and James A. Spangenberg, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST 1. A Federal Supply Schedule contractor may properly offer only to an ordering agency a one-time price reduction from its schedule contract for a specific order. 2. Agency properly ordered items incidental to and necessary for the operation of a computer system ordered under Federal Supply Schedule (FSS) contract, which provided for the provision of such incidental items not specifically listed in the FSS contract. DECISION ViON Corporation protests the Defense Information Systems Agency's (DISA) issuance of delivery orders Nos. DCA200-97-F-0761 and DCA200-97-F-0765 to the Severn Companies, Inc., under Severn's Federal Supply Schedule (FSS) contract No. GS-35F-092D. ViON complains that the delivery orders are outside the scope of Severn's FSS contract. We deny the protests. On September 23 and 25, 1996, DISA issued two requests for quotations (RFQ) to contractors holding the appropriate FSS contracts and to ViON which has an indefinite delivery/indefinite quantity (IDIQ) or requirements contract with DISA for the installation and maintenance of mainframe computers.[1] The RFQs sought quotes for the replacement of existing central processing units (CPU) at DISA's Jacksonville, Florida, and San Diego, California, Defense MegaCenter data processing sites. Vendors were informed that, among other things, they must provide International Business Machines compatible mainframe CPUs and "all additional components necessary to provide a fully functional [CPU] meeting these requirements." A 1-year warranty was required for the CPU to be installed in Jacksonville and a 3-month warranty was required for the CPU to be installed in San Diego. In response, DISA received the following quotations from ViOn and Severn pursuant to their respective contracts: Jacksonville San Diego Severn $1,574,444 $1,397,000 ViON $4,581,000 $4,680,000 ViON Alternate Quote $2,700,000 The delivery orders were issued to Severn on October 3 and 10, based upon that firm's significantly lower quoted prices, and these protests followed. ViON protests that the orders to Severn are materially different from, and exceed the scope of, Severn's FSS contract. Specifically, ViON complains that Severn improperly offered "one time spot discounts" below its FSS contract prices, which were not made available to other schedule users; that more than half of the items ordered by DISA are not listed on Severn's FSS contract; and that the delivery orders' warranty and "trade-in" provisions are materially different from those provided for in Severn's FSS contract. Under the FSS program, the General Services Administration enters into indefinite delivery contracts with commercial firms to provide supplies and services, at stated prices for given periods of time, as a means of providing federal agencies with a simplified process for obtaining commonly used supplies and services at prices associated with volume buying; ordering agencies issue delivery orders directly to schedule contractors for the required supplies and services. Federal Acquisition Regulation (FAR) sec. 8.401 (FAC 90-41).[2] Non-mandatory schedule users, such as DISA, are directed to use their business judgment in determining whether ordering supplies or services from an FSS vendor represents the best value and meets the agency's needs at the lowest overall cost. FAR sec. 8.404(b)(2). In selecting the best value item and the lowest overall cost, the ordering agency may consider such factors as the special features of one item not provided by comparable items which are required in effective program performance; trade-in considerations; probable life of the item compared with that of a comparable item; warranty conditions; and maintenance availability. FAR sec. 8.404(b)(2)(ii). Here, DISA determined that Severn's substantially lower-priced quotes represented the best value to the agency. While ViON complains that Severn's quoted prices are "one time spot discounts" below its FSS contract prices, this is specifically permitted by FAR sec.