What's in a (brand) name? Unreasonable favoritism.

Matter of: Desktop Alert, Inc., File: B-408196, Date: July 22, 2013 (Chopped, pasted and extracted; if the particulars of this case are critically important to you, read the Decision at the link.)

The protester asserts that the solicitation, which limits the competition to brand name items, is unduly restrictive of competition. We sustain the protest. Solicitation for an emergency mass notification system, telephony and training that was limited on a brand name basis is overly restrictive where the agency fails to demonstrate a reasonable basis for the brand name restriction.

DCMA awarded a Small Business Administration 8(a) set-aside contract on April 11, 2009, to Reliable Government Solutions, Inc., of Silver Spring, Maryland, to provide a product known as the AtHoc Mass Notification System. Among other things, this contract included requirements for: software; licenses; core system; software assurance; upgrades and technical support; 50 dedicated phone lines for transmitting alerts; system installation and set-up; and a back-up system. Contracting Officer’s Statement at 2. This contract ended on April 12, 2013.

On March 12, 2013, DCMA posted the RFQ for the instant procurement on the General Services Administration’s (GSA) e-Buy website. The solicitation was limited under the FSS procedures of FAR § 8.405-6 on a brand name basis to AtHoc products and services. The solicitation sought AtHoc software, upgrades, security patches, software assurance, technical support, communication services, telephony[1] and training.

A limited source procurement under the FSS, such as a brand name limitation, requires a justification that describes the reasons for limiting the competition. On March 7, prior to issuing the RFQ, the contracting officer signed a limited source justification for an AtHoc Mass Notification System. The justification explains the reason for limiting the acquisition to the AtHoc brand name system, as follows:

AtHoc is already installed in the DCMA Infrastructure and is in use by all Contracting Regions across DCMA. By using existing assets, and trained Operator and Administration personnel, DCMA saves money and time. Most of the emergency management force has already been trained on the AtHoc System, and the cost to retrain personnel is substantially lower than other systems. . . . These conditions all point to cost, time, and human resource savings by using the existing AtHoc brand software.

With regard to market research, the justification provides the following assessment, which addressed DCMA’s views of the merits of the AtHoc system:

Based upon the market research conducted, the purchase of the AtHoc brand name represents the best value solution as this product, a) exceeds the technical specifications required for this type of emergency warning system, b) reduces training, as this system is already widely utilized within all DCMA, c) the configuration of this system allows the Agency’s Emergency Management Personnel to provide quick alerts and operability within the Agency, and d) provides a high level ease-of-use for the customers at a very competitive price.

The justification also cites AtHoc’s favorable past performance--both in terms of product reliability and customer service--and states that “AtHoc is the only mass notification application on the [Defense Information Systems Agency (DISA)] Approved Product List (APL).”

On March 20, in response to the e-Buy solicitation, DCMA received one quotation, from Reliable, an AtHoc reseller. Reliable advised in its quotation that at least four of the RFQ’s contract line item numbers (CLINs) for training were listed as open market items in its quotation, because those items are not available on the FSS. On March 29, DCMA re-issued the RFQ on FedBizOpps, via amendment 0001 to the solicitation.

On April 3, Desktop Alert submitted a pre-award protest to DCMA, arguing that the solicitation’s limitation of sources to AtHoc brand name items is unduly restrictive of competition, and that the solicitation fails to describe the agency’s minimum requirements. The protester also asserted that DCMA failed to consider mass notification systems offered by other vendors. In its protest, Desktop Alert notified DCMA that it provides mass notification solutions to DOD and other government and commercial customers.

On April 9, DCMA denied the protest, stating: “[W]e limited our solicitation for support to the AtHoc system [because] it’s the system we currently use and it’s the system we seek to continue to use.”

On April 11, Desktop Alert filed a pre-award protest with our Office arguing the same grounds as its agency level protest. On April 12, the head of the relevant DCMA contracting activity executed a justification and approval, pursuant to FAR
§ 33.104, authorizing award of the contract notwithstanding the stay triggered by the protest to our Office, on the basis that urgent and compelling circumstances did not permit awaiting a GAO decision before proceeding with contract award. That same day, DCMA awarded contract No. S5121A-13-F-0007 to Reliable in the amount of $84,472.50, for the base year, with a total estimated contract value of $540,260.52, inclusive of the base and all option years. Reliable was the only company that submitted a quotation in response to the RFQ.

The protester argues that the solicitation fails to describe the salient characteristics of the agency’s requirement.[4] For this reason, the protester contends that the RFQ is unduly restrictive of competition and does not permit other potentially qualified vendors of similar software systems to compete. Desktop Alert also argues that DCMA’s limited source justification was unreasonable because it failed to describe the agency’s requirements, and did not consider other qualified software systems when justifying its determination to limit the solicitation on a brand name basis.

As discussed below, we find that DCMA failed to justify the use of the restrictive brand name requirements for this procurement. Specifically, we conclude that the agency’s justification is deficient because DCMA failed to adequately define the supplies or services required to meet its needs, or any essential feature of the supplies or services that is unique to the AtHoc brand name. We also conclude that the justification is deficient because the agency failed to document adequately its market research of other vendors’ similar products. For these reasons, we conclude that the solicitation was overly restrictive, and sustain the protest.

Orders placed under the FSS, while streamlined, are considered to satisfy the full and open competition requirements of FAR Part 6. 41 U.S.C. § 152(3) (2006 & Supp. V); FAR § 6.102(d)(3). Moreover, orders or blanket purchase agreements established under the FSS are exempt from the specific requirements in FAR Part 6, including the requirements for justifying restrictions to full and open competition. FAR § 8.405-6. However, to limit sources in FSS orders--such as a brand name requirement--ordering activities are required to justify the restriction in accordance with the procedures set out in FAR § 8.405-6. Id. § 8.405-6(b)(2).

As an initial matter, DCMA argues, in essence, that Desktop Alert is not an interested party to challenge the terms of the solicitation. In this regard, DCMA contends that the RFQ sought maintenance and upgrades for its existing AtHoc system, and did not seek a new mass notification system. AR at 1 (“DCMA did not want to procure a new system or switch to another system; it only wanted to maintain and upgrade the system currently in place.”). The agency asserts that its decision to limit the competition to FSS vendors who are authorized resellers of AtHoc mass notification systems is reasonable because “[b]uying software upgrades and maintenance on a system the agency already owns is far more reasonable than scrapping a functioning system and purchasing a completely new system.” Id. at 2. The agency therefore argues that because the protester requests an opportunity to provide its own mass notification system rather than maintain the existing AtHoc system, it is not an interested party.

The record, however, does not show that the RFQ is merely seeking maintenance or upgrades to the same AtHoc software system that DCMA purchased in 2009. Supp. AR at 2. As the agency’s response to the protest acknowledges, the RFQ seeks a newer version of the AtHoc system with expanded functionality. Id. For example, the newer version of the software “increas[es] the functionality” and “increas[es] the type of methods that may be used to send out warning messages, such as adding capability to provide alerts over Twitter® and using computer desktop alerts (a desktop alert is a message that shows up on a window on the employee’s computer monitor, in addition to telephonic and email alerts).” While the agency will receive “software patches and bug fixes to correct any errors discovered in the software after purchase,” this maintenance appears to be for the newer version of the software purchased, not the 2009 version of the software. Id. Moreover, more than half of the total contract value consists of training and telephony, unrelated to the particular brand name system being purchased. While an agency might reasonably limit a competition to a brand name source where it is simply upgrading an existing system, the record here does not show that the agency has sufficiently justified the limitation for this procurement.

based on our review of the record, we conclude that the agency does not adequately describe its requirements for a mass notification system, or why AtHoc is essential to the government’s requirements. The limited source justification states that “DCMA requires an emergency notification management system . . . to notify DCMA end users on short notice via phone, pager, email, etc. of continuity of operations (COOP), natural disasters, circuit and enterprise application outages, and a myriad of other scenarios that may occur on day-to-day basis.” This general description, however, fails to identify unique features of the AtHoc software system particular to the agency’s needs.

DCMA also argues that its requirement is “to maintain the current AtHoc brand since a large percentage of its workforce was already trained and using this system on a regular basis.” Essentially, the agency raises a circular argument: only the AtHoc system meets the agency’s needs, because the agency does not want to change from the AtHoc system it currently uses. Other than this general rationale, however, the record does not include a definition of DCMA’s requirement or needs that supports the agency’s assertion that the agency’s needs can be met only by the AtHoc software system.

Neither the justification, nor the record submitted in response to this protest, however, state any rationale explaining why the AtHoc software system is the only system that can meet DCMA’s requirement.

The record also fails to support the agency’s contention that limiting the acquisition to AtHoc software is reasonable because its staff has already been trained on the software. the agency concedes that although the agency currently has approximately 300 personnel who have been trained on the 2009 version of the AtHoc software, the “DCMA workforce is not static,” and that training for new personnel will be required: As new personnel join the agency and others depart there exists a requirement that these new employees receive training,” and that “the use of [the AtHoc software] is a perishable skill and employees who were trained on this system in previous years could benefit from refresher training provided by the vendor. Given the amount of training that the contract requires, in combination with the agency’s recognition that it will be required to re-train its staff even if it purchases the AtHoc software system, we find that the agency’s justification limiting the procurement on this basis is insufficient and unreasonable.

Another reason stated in the limited source justification for limiting the competition is that DCMA will save costs and time by upgrading its existing AtHoc system and relying on personnel already trained for that system. FAR subpart 8.4, however, does not cite cost or time savings as a basis for restricting sources. Moreover, the agency has not provided any support for this rationale, either in the justification or its response to the protest. In contrast, the protester asserts that it can provide an upgrade to DCMA’s current installed software by replacing the software system with its current software, and that based on its published FSS pricing, its Desktop Alert software system would cost the Government 20 percent less than the award price to the intervenor. The protester argues that since the original award in 2009, mass notification systems have improved significantly, and generally, the cost has been decreasing.

Next, we conclude that the justification also fails to adequately comply with the market research requirement of FAR § 8.405-6, which requires documentation of the agency’s finding that “other companies’ similar products, or products lacking the particular feature, do not meet, or cannot be modified to meet, the agency’s needs.” FAR § 8.405-6(b)(1). Specifically, the justification fails to show whether DCMA conducted market research concerning other companies’ products. Instead, the agency’s justification merely states that, based upon market research, “the purchase of the AtHoc brand name represents the best value solution” as it exceeds the technical specifications, reduces training, allows the agency to provide quick alerts, and provides a high level ease-of-use at a very competitive price. AR, Tab E, Justification at 1. This analysis does not support the brand name restriction, because, for example, it does not discuss any “technical specifications” that the AtHoc software system exceeds.

DCMA did not adequately define its requirements or specify any special features of the AtHoc supplies and services that make this brand name essential to the agency’s needs. DCMA also did not demonstrate with adequate market research or otherwise that it considered whether other companies’ similar products, or products lacking a particular feature, do not meet, or cannot be modified to meet, the agency’s needs. We find the agency’s limited source justification fails to comply with requirements of FAR § 8.405-6, and is therefore unreasonable.

Because DCMA failed to adequately justify its limitation of the procurement on a brand name basis, the award to Reliable was improper. However, because DCMA moved forward with contract award due to urgent and compelling circumstances, we do not recommend the termination of the contract with Reliable. Instead, we recommend that the options under Reliable’s contract not be exercised and that the agency assess and define its requirements for an emergency notification management system, and either properly justify its need to limit competition to a single brand name system, or recompete its requirement beyond the base year. We further recommend that the agency reimburse the protester the costs of filing and pursuing its protest, including reasonable attorneys’ fees.