ELECTRONIC DATA SYSTEMS, LLC v. USA

Filing 51

PUBLISHED OPINION (redacted) to opinion 45 filed under seal. Signed by Judge Francis M. Allegra. (si)

ELECTRONIC DATA SYSTEMS, LLC v. USA

Doc. 51

In the United States Court of Federal Claims
N o . 09-857C (Filed Under Seal: April 26, 2010) R e issu ed : May 13, 2010 1 _ _ _ __ _ _ __ _ E LE C T R O N IC DATA SYSTEMS, LLC, P l a i n t i f f, v. T H E UNITED STATES, D efen d an t, and B A E SYSTEMS INFORMATION T E C H N O LO G Y INC., D e f e n d a n t - In t e r v e n o r . * * * * * * * * * * * * * * * * P o st-aw ard bid protest; Technology support co n tract; Cross-motions for judgment on the ad m in istrativ e record; Standard of review ­ B a nn u m ­ Axiom; Deviation from price ev alu atio n terms; Failure to amend ­ v io latio n of FAR § 15.206(a); Meaningful d iscu ssio ns; No violation of FAR § 1 5 .3 0 6 (d); Failure to modify solicitation did n o t, per se, result in violation of FAR's d iscu ssio n requirements; Agency evaluation o f data center proposal not arbitrary and cap ricio u s; No prejudice where d isap p o in ted bidder could not show it had a su b stan tial chance of receiving contract but for the error; Alfa-Laval construed; Relief d e n ie d .

_ _ _ __ _ _ __ O PIN IO N _ _ _ __ _ _ __ _ R ich a rd J. Conway, Dickstein Shapiro, LLP, Washington, D.C., for plaintiff. D avid M. Hibey, Civil Division, United States Department of Justice, Washington, D.C., w ith whom was Assistant Attorney General Tony West, for defendant. Michael R. Charness, Vinson & Elkins, LLP, Washington, D.C., for defendant-intervenor. ALLEGRA Judge: T h is post-award bid protest case is before the court on the parties' cross-motions for jud gm en t on the administrative record. Plaintiff, Electronic Data Systems, LLC (EDS), protests

An unredacted version of this opinion was issued under seal on April 26, 2010. The o p in io n issued today incorporates the majority of the parties' proposed redactions and corrects some minor typographical errors. The redacted material is represented by brackets [ ].

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Dockets.Justia.com

the Department of Treasury's award of a contract to BAE Systems Information Technology, Inc. (B A E) to provide information technology infrastructure support services. For the reasons that follo w , the court DENIES plaintiff's motion for judgment on the administrative record and G R A N T S defendant's and defendant-intervenor's cross-motions. I. BACKGROUND T h e administrative record in this case reveals the following: O n September 6, 2008, Treasury issued Request for Proposals (RFP) # A08-047, seeking a co n tracto r to provide a "reliable, secure, efficient, effective, and technologically current IT infrastructure" to support the agency's ongoing efforts ­ a bundle of services the RFP denoted as "In fo rm a tio n Technology Infrastructure Managed Services" or "IT IMS." It contemplated the aw ard of an infinite delivery/infinite quantity, performance-based service contract with a base p eriod of three years and two successive two-year award terms, which the awardee could earn thro u gh outstanding performance. Individual task orders placed under the proposed contract were to be issued on a time-and-materials, or fixed-price basis (or a combination thereof). The ceiling for the contract is $325 million, with a guaranteed minimum of $250,000. The RFP provided that th e award of the contract would be on a negotiated, "best value" basis. A. T h e RFP 1. P ro p o sa l Requirements

T h e RFP's requirements took the form, in part, of several Contract Line Items (CLINs). Three of these ­ CLINS 002, 003 and 004 ­ were denominated "core services," with portions of each related to end user services, data center operation and local area network (LAN) operations, an d disaster recovery and continuity of operations. End user services were sought to provide T reasu ry employees with "the technology and infrastructure required to perform their job fun ction s," including desktop computers and software for all users, and laptops and personal d ev ice assistants (PDAs) for specified users, as well as technological support, including both rem o te and desk side assistance. The infrastructure services desired involved the development and m a in ten an ce of data center operations and network systems, including "major hardware and in frastru ctu re software platforms," such as "network router, switch, hub, and concentrator d ev ices." Finally, the solicitation emphasized that disaster recovery and continuity of operations (C O O P ) were a "high priority," requiring the awardee to reengineer Treasury's disaster recovery an d COOP facilities, processes and procedures. Each of the referenced core services came with a d etailed set of requirements ­ thirty-six each for both end user services and data center and LAN o p eration s, and sixteen for disaster recovery and continuity of operations. Other requirements listed in the RFP involved areas such as information technology security, network infrastructure o p eratio n s,2 engineering and testing services, and program and process management.

The RFP defined "network infrastructure" as "the collection of network router, sw itch , hub, and concentrator devices; MS Active Directory, Domain Controller, DNS [do m ain name system] and DHCP [dynamic host configuration protocol] servers, remote

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O ffero rs were to propose fixed prices for each of these core services based on a population of 2,100 Treasury end users (later increased to 2,700 users). To define the needs of these em ployees, the RFP sketched Treasury's current standard configurations in various ways ­ in d icatin g, for example, the types of work stations to be employed; the base standards for end user's hardware and software; and the number of service installs, moves, calls, etc., that had been m ade over the past five fiscal years. The RFP required each offeror to propose a user base ex p a nsio n price (UBE) to support up to 200 additional end users should the need arise. The prop osed UBE price was to be a fixed monthly charge, per user, which would be added to the base m o n th ly fixed price of the core services CLINs if and when additional users were added. T w o other CLINs are relevant here. CLIN 005 required the contractor to maintain an onlin e catalog of hardware and software which Treasury could use to acquire additional items beyond th o se included in the core services package. Offerors were to propose pricing for the on-line catalog at a fixed discount off the "lowest publicly available price," as determined by the General S erv ices Administration federal supply schedule or other government-wide contract vehicles. While software prices in the catalog had to be updated only annually, the cost of hardware, handh eld devices, peripherals and network and data center equipment had to be updated every six m o n th s . CLIN 006 required offerors to delineate a technical approach and pricing for a sample task p ro ject (the Sample Task) designed to be representative of the tasks Treasury might order during the course of the contract. The Sample Task involved supporting a hypothetical new Treasury office with 100 employees for three months. The RFP mapped out the following more detailed re q u ire m e n t s :
Local · · · · · D ata C e nte r · · · · · 1 0 0 Workstations (laptops) for the 100 person staff with standard c o n f i g u r a t io n s . 20 Blackberry devices. 1 color and 1 black and white printer for every 15 people. N e tw o rk switches and patching, as required. L oc a l print server. 1 - Oracle server to support the 100 person staff and a Commercial Off th e Shelf (COTS) application to provide at least 500 GB data storage. O ra c le licenses will be required for each of the 100 people. 1 - IIS server so that the application may be web enabled. S e c u re remote access facilities as provided to all Treasury DO [D ep artme ntal Offices] users. A cc ess to all other Treasury DO applications.

access/VPN [virtual private network] concentrators; the firewall, IDS/IPS [intrusion d etectio n system/intrusion prevention system], encryption and other network security dev ices; and the SNMP [simple network management protocol]-based network and system m anagem ent devices."

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Fir e w a ll

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A firewall in the DO Data Center must be purchased and configured that lim its access from Public Debt to the DO LAN. T he firewall must allow only the 100 authorized TEMP users to access P u b lic Debt. A firewall must be purchased and configured for the disaster recovery site tha t provides the same functionality as the production firewall.

R egardin g pricing, the RFP indicated that "[t]he Labor Rates and the on-line catalog established in the contract will be used to build the Task Order (TO) pricing," but that "[o]fferors shall provide a price that supports their approach . . . for this Sample Task as an IDIQ proposal with labor rates, an d hardware and software charges." The prices of specific items were to be reflected on a w orksheet that was provided with the RFP.3 The RFP indicated that Treasury anticipated ap p ro x im ate ly ten projects per year of a similar magnitude, and therefore the total price of CLIN 0 0 6 was to be calculated by multiplying the Sample Task price by seventy (70) ­ corresponding to ten projects per year over a period of seven years (the total life of the contract). That price was th en to be included in the offeror's total evaluated price.

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This worksheet looked as follows:

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T h e RFP's performance work statement (PWS) further refined Treasury's objectives using S erv ice Level Agreements (SLAs) that established service level metrics and acceptable quality lev els (AQLs) for particular work. Regarding these measures, the RFP explained ­ The IT IMS Contract shall have defined Performance Standards and AQLs for core an d supporting service areas established through SLAs. The "Performance Target" d efin es the desired value or best case scenario for a particular metric within a serv ice area, while the AQL defines the minimum acceptable performance level or w o rst case scenario which is still considered acceptable for that metric, below w hich the Contractor will be found "deficient" in performance. Th e RFP went on to explain that "[w]hen the Contractor's measured performance on a particular m e tric is below the AQL value, the Government may assess a disincentive," adding that "not m eeting the AQL in one metric in the service area will render the contractor's performance as deficient for the entire service area." Offerors were instructed that their proposals should include a "[d]escription of the Offeror's approach to ensuring how they will meet the performance metrics."

Particularly relevant herein are the SLA standards for certain data center functions, which w e re outlined in section 4.2 of the PWS. This segment of the RFP defined data center operations as "the centralized support of information technology equipment, resources and the underlying ph ysical infrastructure along with the processes and organizational structure required to establish an IT operating environment." Inter alia, the SLAs set performance targets of 99.99 percent av ailab ility, not including scheduled downtime, for the data center's e-mail function, file and printing functions, and application transport. Each of these SLAs had an AQL of "no deviation." 2. E v a lua tio n Criteria

Th e award was to be made to the offeror whose proposal was determined to be most ben eficial to the government, with appropriate consideration given to four evaluation factors, listed in descending order of importance: Managed Services Solution, Performance Risk, Price and Sm all Business Participation. The RFP indicated that, when combined, the non-price factors ­ M an aged Services Solution, Performance Risk and Small Business Participation ­ were significantly more important than Price.4 However, the RFP noted that "price may become a d eterm in ativ e factor" as non-price factors reached parity. Each proposal's technical approach was to be evaluated according to the extent it ensured attain m en t of program objectives, and the probability that it would succeed in achieving the co n tract goals. Toward that end, each sub-factor and factor evaluated was to be assigned one of fiv e adjectival ratings (outstanding, good, acceptable, marginal, or unacceptable) based on the
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The Managed Service Solution factor contained four sub-factors, listed in d esc en d ing order of importance: Technical Approach, Management Plan, Key Personnel, an d Sample Task Response. The Performance Risk factor contained two sub-factors, in d escen d in g order of importance: Past Performance and Corporate Experience and C ap ab ilities. The Price and Small Business Participation factors did not have sub-factors.

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strengths/significant strengths, weaknesses/significant weaknesses, and deficiencies within each category.5 A strength/significant strength was defined as an attribute of the proposal that was likely/very substantially likely to lead or contribute to successful performance. A weakness/ sign ifican t weakness was defined as an attribute likely to increase/substantially increase the p ro b ab ility of unsuccessful contract performance. A deficiency was defined as "a solicitation req u irem e nt that has not been addressed in the Offeror's proposal, or has been addressed in a m a nn er that is deemed unacceptable by the evaluation team members." The RFP specified that the gov ernm ent would not award a contract to an offeror with a "deficiency" in any factor. The source selec tio n plan instructed agency evaluators that the adjectival ratings were not necessarily d eterm ina tiv e: "The SSA [Source Selection Authority] will not be strictly bound by the ratings," it stated , but rather "retains the discretion to balance the technical merits of each proposal against the p ro p o sed overall estimated price and against other offers to determine the best value to the G o v e r n m e n t ." The RFP required offerors to submit a pricing workbook that Treasury would use to co m p u te the total evaluated price of each proposal. The total evaluated price consisted primarily of costs associated with the relevant CLINs, i.e., the fixed costs of the core services, the cost of item s ordered from the on-line catalog (as calculated using Treasury's estimated expenditures and th e offeror's proposed discount rate), and the total price of the Sample Task.6 Total price was to be ev alu ated pursuant to 48 C.F.R. § 15.404-1 for "accuracy, completeness, and reasonableness" and to determine if it reflected "a clear understanding of the requirements, . . . consistent with Offeror's tech n ical price proposal." The price of the core services CLINs was to be evaluated for "un b alan ced pricing" pursuant to 48 C.F.R. §§ 15.404-1(g)(1). The UBE price was not included in th e offeror's total evaluated price, but the RFP stated that it would be considered for fairness and reaso n ab len ess as compared to industry norms. In the RFP, Treasury reserved the right to conduct discussions with offerors in the co m p etitive range. Offerors in that range were to be invited to make oral presentations to explain th eir written technical proposals, as well as their qualifications to perform successfully under the con tract. Prior to the receipt of proposals, Treasury amended the solicitation on seven occasions ­ th e last of which occurred on November 20, 2008. B. Pro po sals and the Evaluation Process

O n November 26, 2008, seven offerors submitted proposals in response to the RFP. On February 2, 2009, Treasury issued its initial price evaluation report on the proposals. The price ev alu atio n report reviewed each offeror's total price to determine whether it was fair and reaso n ab le. EDS' total evaluated price was $[], BAE's was $[], and [a third offeror's] was $[].

For example, an offeror could receive a good rating for its technical approach if the p ro p o sal "fully me[t] or somewhat exceed[ed] all solicitation requirements, and offer[ed] one or more strengths not offset by weaknesses." The Source Selection Plan contained specific instructions for evaluating the price of the Sample Task scenario. In this regard, it stated that various teams would "evaluate [the] O fferor's use of proposed labor categories, rates and unit prices of hardware/software."
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B o th EDS' and BAE's total evaluated prices were determined to be reasonable, while the report n o ted that [the third offeror]'s price was "too high" compared to the other offerors' prices. Accounting for the latter observation, the report found that [the third offeror's] labor rates were [] p ercen t higher than the average calculation of all competitors' rates. The price evaluation report also identified and compared each bid's individual CLIN p ricin g. As to the core services, the report found that the prices on two of EDS' disaster recovery C LIN s were "too high" when compared to the other proposals. However, it stated that "EDS' . . . o v erall CLIN prices were fair and reasonable." With respect to CLIN 005, the on-line catalog, B A E and [the third offeror] proposed [] and []-percent discounts, respectively, off the lowest p u b licly available price, while EDS proposed [] discount. Treasury deemed EDS' catalog pricing "fair and reasonable," and, despite BAE's and [the third offeror]'s discount, considered the difference in catalog prices between the bidders "immaterial." With respect to CLIN 006, the report found all three offerors' proposals to be "in co m p lete." [The third offeror] had excluded the cost of firewalls from its CLIN 006 pricing, w h ile EDS had excluded six required color printers. The Treasury team found BAE's hardware an d software pricing to be significantly lower than that of both EDS and [the third offeror], and ex p resse d concern that BAE was missing required items. While EDS' and [the third offeror]'s h ard w are and software costs were $[] and $[], respectively, BAE's costs were only $[]. The report fo u n d that this pricing differential occurred because "BAE's sample task did not include pricing for any personal computers, blackberrys or firewalls," and thus "did not adequately price all h ard w are and software items." Regarding such costs, BAE's acquisition plan stated ­ BAE Managed Services will provide all equipment required to outfit the 100 new u sers for TEMP [the temporary Treasury office] to include the laptops, laptop accessories, monitors, Blackberries, network printers, network switches, servers, an d associated software for the standard manage service user. This equipment is cov ered in our e-catalog as part of our 1-100 user upgrade. The equipment that falls outside of our normal user service, firewalls, Oracle client licenses, and 500 G B SAN space, will be priced and provided in our proposal. These items are not n o rm al use items for a managed services user and are therefore extra to that service.

BAE's acquisition plan included a table that broke out the specific products to be acquired b etw een those "Included in Managed Services" and those "Outside Managed Services." This table d escrib ed the products to be purchased with great specificity, e.g., "a Dell Latitude E5400 Laptop." The items listed as "Included in Managed Services" were not listed in BAE's Sample Task Pricing C h art; only two of the table items listed as "Outside Managed Services" were included in the P ricin g Chart. BAE received a rating of "acceptable" for its Sample Task. Contrasting the offerors' UBE prices, Treasury again uncovered a discrepancy in the p rop o sals: while BAE's and [the third offeror']s UBE prices were comparable, at $[] and $[], resp ectiv ely, EDS' was only $[]. This differential arose from the offerors' different approaches to U B E pricing. While BAE included in its UBE price the same services and hardware and software costs it had included in its core services for base users, EDS included only the labor and other

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d irect costs associated with adding an additional user, but not the associated hardware and so ftw are costs. EDS' plan contemplated that Treasury would order such hardware and software d irectly from EDS' on-line catalog, which EDS believed would create more transparency and flex ib ility than a fully-bundled UBE price. On February 5, 2009, Treasury issued its initial technical evaluation report on all the offers, in which EDS, BAE, and [the third offeror] all received "good" overall ratings. With respect to B A E 's technical approach, the report commented that Treasury needed clarification regarding "the reliab ility tier level for the Herndon Data Center Facility as it relates to the standards defined by the Uptime Institute."7 Such a rating, the report concluded, could affect the data center's "reliab ility and redundancy," and thus its ability to meet the 99.99-percent availability SLAs o u tlin ed in the PWS. Following this initial evaluation, on March 25, 2009, a competitive range was established co n sistin g of EDS, BAE, and [the third offeror]. On April 7, 2009, Treasury notified BAE, EDS, an d [the third offeror] that their offers were in the competitive range and that discussions would be n ece ssa ry. In the ensuing discussions, Treasury informed all three offerors that the pricing for their C LIN 006 responses was incomplete. In addition, Treasury notified [the third offeror] that its total price and its proposed labor rates were too high. Treasury did not notify EDS that its disaster reco v ery CLINs were considered too high. The oral presentations envisioned by the RFP were m ad e on April 20-22, 2009. On March 10, 2009, Treasury amended the RFP, requiring, inter alia, th at final proposal revisions be submitted on May 12, 2009. On May 12, 2009, BAE, EDS, and [the third offeror] submitted their final revised p rop o sals. In its final bid, EDS increased its CLIN 006 hardware and software pricing to $[], to acco u n t for the six printers missing from its initial bid. BAE minimally increased its CLIN 006 h ard w are and software pricing to $[], but continued to exclude the bulk of its hardware and softw are costs from its Sample Task pricing. In its response to Treasury's discussion questions, B A E clarified that the hardware and software costs it had excluded from its Sample Task price w ere included in its UBE price, which established a flat rate for "all managed services associated eq u ip m en t and software," including almost all of the hardware and software required for the Sam ple Task. BAE stated that any hardware or software not included in the UBE package was priced out in the Sample Task worksheet, stating that ­ "[t]he additional 500GB of Storage Area N etw ork (SAN) space, firewalls, and Oracle client licenses are not part of the bundled managed services offering, therefore we will order them separately through the e-catalog, and priced them separately in the Sample Task pricing." As in its initial proposal, BAE's final proposal specified w hich hardware and software items were included in its UBE pricing (and thus not priced

The Uptime Institute provides a set of Tier Performance Standards that use a series of benchmarks to compare the uninterruptible availability of customized data centers to each o th er. Currently, there are four tiers of availability, ranging from Tier I at 99.67-percent av ailab ility to Tier IV at more than 99.99-percent availability.

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separately in the Sample Task), and which items were added for the Sample Task and thus priced o u t separately in the Sample Task pricing worksheet.8 In its response to the discussion questions, which was submitted with its final proposal, B A E clarified that "[t]he Herndon Data Center Facility is a Tier II data center as defined by the U ptim e Institute . . . [and] is designed to meet 100% of Treasury's specified data center requ irem ent." Elsewhere in its final proposal, BAE assured Treasury of its "expected performance in meeting and/or exceeding the identified SLA targets for all CLINS." To back up this assertion, B A E described, in detail, its plans to meet the 99.99-percent availability targets by employing, for ex am ple: (i) a "clustered Exchange environment" to meet Treasury's e-mail needs; (ii) a "clustered . . . server configuration" to provide the requisite file and printing capability; and (iii) a solution w ith "high performance blade server environment and Netcool monitoring" to provide for ap p licatio n transport. Following submission of the final proposals, Treasury issued final technical and pricing ev alu ation reports on the remaining offerors. Notwithstanding BAE's assurances, Treasury's tech n ical evaluators remained concerned regarding the data center's availability and reliability. Treasury assigned BAE a "significant weakness" for its data center, noting that ­ A Tier II Data Center has an end-user availability of 99.75% (22 hours of d o w n tim e per year) . . . This availability rating does not meet the availability/ reliability needed to support the IT IMS SLAs. The IT IMS SLA threshold is set at

As BAE had done initially, its final Sample Task pricing worksheet reflected certain items of hardware and software, as follows:
Catalogue Item D e s c r i p t io n 5 0 0 G B SAN Space ­ Hardware P urc ha se 5 0 0 GB SAN Space ­ Hardware M a in te n an c e (incl. in Purchase) O r a c le License O r a c le License ­ Maintenance F ir e w a ll ­ Hardware Purchase F ire w a ll ­ Management Software (incl in Purchase) F ire w a ll ­ Hardware Maintenance (incl in Purchase) H o u r s /Q u a n t i t y 1 U n it Price $[] Total $[]

8

1

$

$

100 100 2 2

$[] $[] $[] $

$[] $[] $[] $

2

$

$

A cco rd in gly, as it had done it its initial proposal, BAE's CLIN 006 pricing chart listed some item s with prices and other items without prices, but did not list a number of other items that w ere included in its UBE pricing.

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a minimum of 99.99% availability. Thus, use of the Herndon Data Center Facility co u ld result in the Offeror failing to meet the metric specified in the SLA, thereby po tentially incurring disincentives. H o w e v er, the evaluation team believed that this significant weakness was offset by two significant stren gth s and numerous other strengths in BAE's technical proposal. This led them to conclude tha t "there is a high probability of success in each of the service areas" and, overall, that BAE's tech n ical solution presented a "strong probability of successful execution with a low degree of risk." BAE's technical approach sub-factor ultimately received an overall rating of "good." The price evaluation team found EDS's final overall price to be "fair and reasonable," w h ile BAE's was considered "substantially lower." The team determined that "the Government h as no basis to question [BAE's substantially lower prices] with the exception of CLIN 006." As to the latter point, the team acknowledged that "the three offerors did not utilize a common basis in d ev elo p in g their proposed HW/SW costs," adding that "BAE indicated that much of its HW/SW co sts would be included in its `user base expansion' prices, and therefore would be excluded from its sample task price." However, unlike in the preliminary evaluation, in this final evaluation, the Treasury team accepted BAE's approach, stating that "BAE was the only offeror to use the User B ase Expansion Pricing appropriately for the Sample Task." Treasury's only remaining concern regard in g BAE's approach was that the latter's UBE price might not include certain hardware and so ftw a re for the IIS and Oracle servers. The team noted that EDS' approach to the CLIN 006 pricing was comprehensive and included all components, possibly even some duplicative of those alread y in its underlying infrastructure. Following this analysis, the final evaluation results were as follows:
F A C T O R /S U B - F A C T O R BA E O ve ra ll Non-Price Rating A . Managed Services Solutions 1. Technical Approach 2. Management Plan 3. Key Personnel 4. Sample Task Response B . Performance Risk 1. Past Performance 2. Corporate Experience C . Small Business M E R IT RATING & PRICE $ 1 6 9 , 6 5 5 ,4 1 8 G ood G ood G ood G ood G ood A c c e p ta b le G ood G ood O u t s ta n d i n g G ood

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ED S O ve ra ll Non-Price Rating A . Managed Services Solutions 1. Technical Approach 2. Management Plan 3. Key Personnel 4. Sample Task Response B . Performance Risk 1. Past Performance 2. Corporate Experience C . Small Business

$ 2 1 8 , 7 8 0 ,5 4 7 G ood G ood G ood G ood A c c e p ta b le A c c e p ta b le G ood G ood O u t s ta n d i n g O u t s ta n d i n g

[ T h e Third Offeror] O ve ra ll Non-Price Rating A . Managed Services Solutions 1. Technical Approach 2. Management Plan 3. Key Personnel 4. Sample Task Response B . Performance Risk 1. Past Performance 2. Corporate Experience C . Small Business

$[] A c c e p ta b le A c c e p ta b le A c c e p ta b le G ood G ood A c c e p ta b le G ood A c c e p ta b le O u t s ta n d i n g G ood

O n July 8, 2009, the Source Selection Authority (SSA) issued his decision awarding the co n tract to BAE. In his decision, the SSA discussed the fact that BAE's data center was a Tier II facility, stating ­ A Tier II Data Center has an end-user availability of 99.75% (22 hours of do w ntim e per year). Although the IT IMS RFP did not specify a required av ailab ility percentage applicable directly to the data center, this availability p ercen tage is lower than the availability threshold of the IT IMS SLAs which are 9 9 .9 9 % . Thus, use of a Tier II Facility potentially could result in the Offeror failing to meet the SLA metrics, thereby incurring disincentives. While this aspect of B A E 's proposal raises some concern, I note that BAE did in fact specify in their p ro p o sal response that they are able to meet the SLA availability requirements of

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9 9 .9 9 % with their proposed solution. This may mean that BAE has not officially certified their facility under the requirements of the Uptime Institute, but does have (o r will obtain) the physical infrastructure and capacity to meet the requirements of the SLAs. Th e SSA cited various other "significant strengths" and "strengths," including several associated w ith the data center, that supported, in his view, BAE's rating of "Good" for the Technical A p p roa ch subfactor. In addition, the SSA discussed the disparate approaches to hardware and software pricing taken by the offerors in CLIN 006, as follows: T h e price analysis noted an issue with regard to the pricing of CLIN 006, the sam p le task. Specifically, there was a significant disparity in the HW/SW costs p ro p o sed by the three offerors. The HW/SW costs for CLIN 006 ranged from a low o f $[] (BAE) to a high of $[] (EDS). According to the price analysis, it appears the th ree offerors did not utilize a common basis in developing their proposed HW/SW co sts. In particular, BAE indicated that much of its HW/SW costs would be in clu d ed in its "user base expansion" prices, and therefore would be excluded from its sample task price. Meanwhile, [the third offeror] and EDS included costs for sim ilar items in their sample task solutions. For purposes of conducting my tradeoff analysis, I have attempted to determine w hat the offerors prices would have been if EDS and [the third offeror] had prop osed HW/SW costs for CLIN 006 on the same basis as BAE. BAE's price w o u ld be unchanged ($169,655,418). For EDS and [the third offeror], I cannot d eterm in e exactly what the prices would have been using the BAE approach. However, using the approach most favorable to EDS and [the third offeror], I have ex clu d ed CLIN 006 HW/SW costs for [the third offeror] and EDS altogether. The SSA noted that with the adjustments he made, the offeror's prices would be as follows:
O f fe r or BA E ED S [ T h ir d Offeror] T o ta l Price $ 1 6 9 ,6 5 5 ,4 1 8 $ 2 1 8 ,7 8 0 ,5 4 7 $[] C L IN 006 HW/SW $ [] $ [] $[] A d ju ste d Price $ [] $[] $[]

T h e SSA noted that "even if HW/SW costs for CLIN 006 are excluded altogether for EDS and [the th ird offeror], BAE is still much lower in price than the other two offerors." In conducting his best value analysis, the SSA observed that while both EDS and BAE had receiv ed overall non-price ratings of "good," "BAE has a lower price." He noted that, without the ad jus tm en t associated with CLIN 006, BAE's price was "substantially lower than EDS, by more th an $49 million," and found that BAE's proposal was thus "superior" to EDS'. The SSA

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in d icated that he still felt that BAE's proposal was superior to that of EDS even if the CLIN 006 ad ju stm en ts were made, stating that "even if HW/SW costs for CLIN 006 were excluded for EDS alto geth er, BAE would still enjoy a price advantage of more then $[] million over EDS." Based on th is analysis, the SSA concluded that BAE's proposal represented the "best value" to the go v ern m en t, and, on that basis, awarded the contract to BAE. BAE began performing the IT IMS co n tract in July of 2009. C. Pro cedu ral History

O n July 30, 2009, EDS filed a bid protest before the Government Accountability Office (G A O ). On September 10, 2009, EDS filed a supplemental protest with GAO. On November 5, 2 0 0 9 , GAO denied the protest. On December 14, 2009, EDS filed its complaint with this court, claiming, inter alia, that T reasu ry improperly accepted: (i) BAE's incomplete CLIN 006 pricing proposal; and (ii) BAE's no n-con form ing technical approach. In addition, EDS claimed that Treasury had failed to conduct m e an in gfu l discussions with EDS on an equal basis with the other offerors. On January 14, 2010, p lain tiff filed its motion for judgment on the administrative record. On January 28, 2010, d efen d an t and defendant-intervenor filed their cross-motions for judgment on the administrative record and responses to plaintiff's motion. Following the completion of briefing on the crossm o tio n s, on March 1, 2010, oral argument was held on the parties' motions for judgment on the ad m in istrativ e record. II. D IS C U SS IO N B efo re turning, in detail, to plaintiff's claims, we begin with common ground. A. Stan da rd of Review

T h e Federal Circuit, in Bannum, Inc. v. United States, 404 F.3d 1346, 1355 (Fed. Cir. 2 0 0 5), instructed that courts must "distinguish . . . [a] judgment on the administrative record from a summary judgment requiring the absence of a genuine issue of material fact." Bannum teaches tha t two principles commonly associated with summary judgment motions ­ that the existence of a gen u in e issue of material fact precludes a grant of summary judgment and that inferences must be w e igh ed in favor of the non-moving party ­ do not apply in deciding a motion for judgment on the ad m in istrativ e record. Id. at 1356-57. The existence of a question of fact thus neither precludes the granting of a motion for judgment on the administrative record nor requires this court to co n d u ct a full blown evidentiary proceeding. Id.; see also Int'l Outsourcing Servs., LLC v. United States, 69 Fed. Cl. 40, 45-46 (2005).9 Rather, such questions must be resolved by reference to the ad m in istrativ e record, as properly supplemented ­ in the words of the Federal Circuit, "as if [the
9

Bannum was based upon RCFC 56.1, which, in 2006, was abrogated and replaced b y RCFC 52.1. The latter rule was designed to incorporate the decision in Bannum. See R C FC 52. 1, Rules Committee Note (2006); see also NVT Techs., Inc. v. United States, 73 Fed . Cl. 459, 462 n.3 (2006); Bice v. United States, 72 Fed. Cl. 432, 441 (2006), aff'd, 2007 WL 2032849 (Fed. Cir. July 12, 2007).

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C ou rt of Federal Claims] were conducting a trial on [that] record." Bannum, 404 F.3d at 1357; see also NEQ, LLC v. United States, 88 Fed. Cl. 38, 46 (2009); Int'l Outsourcing, 69 Fed. Cl. at 46; C arlisle v. United States, 66 Fed. Cl. 627, 631 (2005).1 0 B a nn u m 's approach reflects well the limited nature of the review conducted in bid protests. In such cases, this court will enjoin defendant only where an agency's actions were arbitrary, cap ricio u s, an abuse of discretion, or otherwise not in accordance with law. 5 U.S.C. § 706(2)(A) (2006); see also 28 U.S.C. § 1491(b)(4) (2006). By its very definition, this standard recognizes the possibility of a zone of acceptable results in a particular case and requires only that th e final decision reached by an agency be the result of a process which "consider[s] the relevant facto rs" and is "within the bounds of reasoned decisionmaking." Baltimore Gas & Elec. Co. v. N R D C , 462 U.S. 87, 105 (1983); see Software Testing Solutions, Inc. v. United States, 58 Fed. Cl. 5 3 3 , 538 (2003); Gulf Group, Inc. v. United States, 56 Fed. Cl. 391, 396 n.7 (2003). As the focus o f this standard is more on the reasonableness of the agency's result than on its correctness, the co u rt must restrain itself from examining information that was not available to the agency. Failing to do so, the Federal Circuit recently observed, risks converting arbitrary and capricious review into a subtle form of de novo review. See Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374, 1 3 7 9-8 0 (Fed. Cir. 2009).1 1 At all events, this court will interfere with the government

In Bannum, the Federal Circuit noted that, in Banknote Corp. of Am. Inc. v. United States, 365 F.3d 1345, 1352-53 (Fed. Cir. 2004), it had erroneously conflated the standards u n d er RCFC 56 and 56.1, albeit in dicta. In this regard, Bannum stated that ­ Although it never reached the factual question of prejudice, the Banknote II cou rt added that it is the trial and appellate courts' task to "determine whether th ere are any genuine issues of material fact as to whether the agency decision lacke d a rational basis or involved a prejudicial violation of applicable statu tes or regulations." This language equates a RCFC 56.1 judgment to a sum m ary judgment under RCFC 56 and is unnecessary to the Banknote II h o ld in g. Because the court decided the issue by an interpretation of the so licitatio n , e.g., making a legal determination, the court in Banknote II did n o t need to consider whether the trial court overlooked a genuine dispute or im p ro p erly considered the facts of that case. 404 F.3d at 1354. Prior decisions of this court had similarly erred. See, e.g., JWK Int'l Corp. v. United States, 49 Fed. Cl. 371, 387 (2001), aff'd, 279 F.3d 985 (Fed. Cir. 2002). In Axiom, the Federal Circuit noted that the "supplementation of the record should b e limited to cases in which `the omission of extra-record evidence precludes effective ju d icial review.'" 564 F.3d at 1380 (quoting Murakami v. United States, 46 Fed. Cl. 731, 7 3 5 (2000), aff'd, 398 F.3d 1342 (Fed. Cir. 2005)). In forceful terms, the Federal Circuit rejected the lenient approach to the use of extra-record evidence reflected in Esch v. Yeutter, 87 6 F.2d 976, 991 (D.C. Cir. 1989), noting that the latter decision: (i) "departs from fun dam ental principles of administrative law as articulated by the Supreme Court;" (ii) has "q u estio n ab le" vitality "even within the D.C. Circuit . . . in light of more recent opinions by tha t court which demonstrate a more restrictive approach to extra-record evidence;" and (iii)
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procu rem ent process "only in extremely limited circumstances." CACI, Inc.-Federal v. United States, 719 F.2d 1567, 1581 (Fed. Cir. 1983) (quoting United States v. John C. Grimberg Co., 702 F.2d 1362, 1372 (Fed. Cir. 1983)). Indeed, a "protester's burden is particularly great in negotiated p ro cu rem e nts because the contracting officer is entrusted with a relatively high degree of d iscretio n , and greater still, where, as here, the procurement is a `best-value' procurement." Banknote Corp. of Am., Inc. v. United States, 56 Fed. Cl. 377, 380 (2003), aff'd, 365 F.3d 1345 (Fed . Cir. 2004).1 2 Th e aggrieved bidder must demonstrate that the challenged agency decision was either irratio n al or involved a clear violation of applicable statutes and regulations. Banknote Corp., 365 F.3d at 1351, aff'g, 56 Fed. Cl. 377, 380 (2003); see also ARINC Eng'g Servs., LLC v. United States, 77 Fed. Cl. 196, 201 (2007). Moreover, "to prevail in a protest the protester must show not on ly a significant error in the procurement process, but also that the error prejudiced it." Data G e n. Corp. v. Johnson, 78 F.3d 1556, 1562 (Fed. Cir. 1996). To demonstrate prejudice, "the p rotes tor must show `that there was a substantial chance it would have received the contract award bu t for that error.'" Alfa Laval Separation, Inc. v. United States, 175 F.3d 1365, 1367 (Fed. Cir. 1 9 9 9 ) (quoting Statistica, Inc. v. Christopher, 102 F.3d 1577, 1582 (Fed. Cir. 1996)).1 3 "Finally,

at all events, "is not the law of this circuit." Axiom, 564 F.3d at 1380-81. As this court has sub sequ ently noted, "[w]hile Axiom undoubtedly permits limited supplementation of the reco rd with evidence that does not involve the agency's procurement decision (e.g., evidence as to whether a plaintiff would experience irreparable harm), it makes clear that any court in th is circuit that relies upon Esch to supplement the administrative record more broadly does so at peril of reversal." NEQ, 88 Fed. Cl. at 47 n.6. As noted by the Federal Circuit, "[p]rocurement officials have substantial d iscretio n to determine which proposal represents the best value for the government." E.W. Bliss Co. v. United States, 77 F.3d 445, 449 (Fed. Cir. 1996); see also Galen Med. Assocs., Inc. v. United States, 369 F.3d 1324, 1330 (Fed. Cir. 2004); TRW, Inc. v. Unisys Corp., 98 F.3 d 1325, 1327-28 (Fed. Cir. 1996); LaBarge Prods., Inc. v. West, 46 F.3d 1547, 1555 (Fed. C ir. 1995) (citing Burroughs Corp. v. United States, 617 F.2d 590, 597-98 (Ct. Cl. 1980)); EP Prods., Inc. v. United States, 63 Fed. Cl. 220, 223 (2005), aff'd, 163 Fed. Appx. 892 (Fed . Cir. 2006). A review of Federal Circuit cases indicates that this prejudice analysis actually co m es in two varieties. The first is that described above ­ namely, the ultimate requirement tha t a protestor must show prejudice in order to merit relief. A second prejudice analysis is m ore in the nature of a standing inquiry. In this regard, the Federal Circuit has held that "becau se the question of prejudice goes directly to the question of standing, the prejudice issue must be reached before addressing the merits." Info. Tech. & Applications Corp. v. U nited States, 316 F.3d 1312, 1319 (Fed. Cir. 2003); see also Myers Investigative & Sec. Servs., Inc. v. United States, 275 F.3d 1366, 1370 (Fed. Cir. 2002); Overstreet Elec. Co., Inc. v. United States, 59 Fed. Cl. 99, 109 n.5 (2003). Cases construing this second variation on th e prejudice inquiry have held that it requires merely a "viable allegation of agency wrong d o in g," with "`viability' here turning on the reasonableness of the likelihood of prevailing on the prospective bid taking the protestor's allegations as true." McKing Consulting Corp. v.
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b eca u se injunctive relief is relatively drastic in nature, a plaintiff must demonstrate that its right to such relief is clear." NEQ, 88 Fed. Cl. at 47; see also Banknote Corp., 56 Fed. Cl. at 380-81; Sea ttle Sec. Servs., Inc. v. United States, 45 Fed. Cl. 560, 566 (2000). B. A lleg ed Improprieties in the Consideration of BAE's proposal

P laintiff asserts that Treasury made three clusters of errors in considering BAE's proposal, thereby prejudicing EDS' ability to compete for the subject contract. First, it asseverates that B A E 's proposal contained a materially noncompliant price for CLIN 006 and was ineligible for aw ard . It asserts that, in accepting the BAE's proposal, Treasury violated 48 C.F.R. § 15.206(a), b y failing to amend the RFP to reflect what plaintiff contends were modifications in the requ irem ents associated with the pricing of CLIN 006. Second, EDS contends that Treasury failed to conduct meaningful discussions on an equal basis with all offerors by failing to advise EDS of th e aforementioned modifications and that its disaster recovery CLIN prices were too high. Finally, EDS complains that Treasury acted in an arbitrary and capricious fashion in assigning B A E 's technical approach a "Good Rating" despite the latter's failure to meet the "99.99 percent" S LA requirements regarding data center reliability. The court will discuss these assertions ser iatim . 1. D e via tio n from the Solicitation Terms ­ CLIN 006 Pricing

"It is hornbook law that agencies must evaluate proposals and make awards based on the criteria stated in the solicitation." Banknote, 56 Fed. Cl. at 386; see also NEQ, 88 Fed. Cl. at 47; PG BA , LLC v. United States, 60 Fed. Cl. 196, 207, aff'd, 389 F.3d 1219 (Fed. Cir. 2004). This req u irem e nt is rooted in the Competition in Contracting Act (CICA) and the Federal Acquisition R egulation s (FAR), both of which indicate that an agency shall evaluate proposals and assess th eir qualities solely based on the factors and subfactors specified in the solicitation. See 10 U .S .C . §§ 2305(a)(2)(A)-(3)(A); 48 C.F.R. §§ 15.305(a), 15.303(b); see also NEQ, 88 Fed. Cl. at 4 7 ; ManTech Telecomms. & Info. Sys. Corp. v. United States, 49 Fed. Cl. 57, 66 (2001), aff'd, 30 Fed . Appx. 995 (Fed. Cir. 2002). If the agency changes any evaluation criterion after issuing the so licitatio n , it must amend the solicitation and notify the offerors of the changed requirement. See 48 C.F.R. § 15.206(a); see also id. § 15.206(d); SP Sys., Inc. v. United States, 86 Fed. Cl. 1, 1 8 (2009); Candle Corp. v. United States, 40 Fed. Cl. 658, 663 (1998). Consistent with these p recep ts, in a case such as this, a protestor must show that: (i) the procuring agency used a sign ifican tly different basis in evaluating the proposal than was disclosed; and (ii) the protestor

United States, 78 Fed. Cl. 715, 721 (2007); see also 210 Earll, LLC v. United States, 77 Fed. C l. 710, 718-19 (2006); Textron, Inc. v. United States, 74 Fed. Cl. 277, 284-85 (2006). (This "v iab ility" standard is reminiscent of the "plausibility" standard enunciated in several recent S u p rem e Court cases. See Dobyns v. United States, 91 Fed. Cl. 412, 422-26 (2010) (d iscu ssin g the "plausibility standard" of pleading drawn from Ashcroft v. Iqbal, 129 S. Ct. 1 9 3 7, 1949 (2009) and Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007))). At all even ts, because of the nature of the allegations of error here, the court is convinced that p lain tiff has met this preliminary "standing" threshold.

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w a s prejudiced as a result ­ that it had a substantial chance to receive the contract award but for th at error. Banknote, 56 Fed. Cl. at 386-87.14 It goes without saying that an agency has "great discretion in determining the scope of an ev alu atio n factor."1 5 Yet, allowing for this, the administrative record still compels the conclusion tha t Treasury veered from the RFP's requirements for providing cost information on CLIN 006 in en d o rsin g (or at least accepting) BAE's pricing approach. The RFP advised, regarding CLIN 006 p ricin g, that offerors should "fully pric[e] out their solution," listing "[a]ll possible costs of the O ffero r's solution." Section L. 6.2 of the RFP called for offerors to submit a price "with labor rates, and hardware and software charges," adding that "[t]he Sample Task worksheet . . . shall be u sed for submittal of the price proposal for the Sample Task." The layout of that pricing w orksheet is revealing, for it contains headings requiring the offeror to list the "Catalogue Items" and "HW/SW/Comms involved.," and columns in which the offeror was to multiply the number o f the designated items needed (e.g., 100 laptop computers) by a "Unit Price," thereby deriving a su b total that would be included in the "Total" for CLIN 006. As the organization of this form p resu p p oses, the RFP indicated that "CLIN 006 is for one-time projects . . . awarded through the issu an ce of Task Orders" and explained that "the on-line catalog established in the contract will b e used to build the Task Order (TO) pricing." The only reasonable reading of these provisions th at can be squared with the accompanying worksheet is that which EDS and others (including so m e of Treasury's evaluators) took away ­ that the CLIN 006 price had to include all the relev an t hardware and software costs, the constituent elements of which were to be separately listed and priced. There is no way reasonably to conclude that the approach taken by BAE was en co m p assed by these original provisions. Further evidence of this lies in the difficulties Treasury encountered in conducting its p rice reasonableness analysis. The RFP provided that the offerors' price proposals would be "evaluated for accuracy, completeness, and reasonableness," and that a price reasonableness an alysis would be conducted using the techniques listed in 48 C.F.R. § 15.404-1.1 6 Most of the p rice reasonableness techniques authorized by this regulation ­ some of which focus on overall

See also NEQ, 88 Fed. Cl. at 48 n.8 (citing cases); Bean Stuyvesant, LLC v. U nited States, 48 Fed. Cl. 303, 321 (2000); Dubinsky v. United States, 43 Fed. Cl. 243, 266 (1 9 9 9 ). Forestry Surveys and Data v. United States, 44 Fed. Cl. 493, 499 (1999) (citing Jo h n Cibinic Jr. & Ralph C. Nash, Jr., Formation of Government Contracts 830 (3 rd ed. 1998) (he reina fter "Cibinic & Nash")); see also Kerr Contractors, Inc. v. United States, 89 Fed. Cl. 3 1 2 , 327 (2009); NEQ, 88 Fed. Cl. at 48. The evaluation of price reasonableness is designed to prevent the government from p ayin g too high a price for a particular contract. See DMS All-Star Joint Venture v. United States, 90 Fed. Cl. 653, 663 n.11 (2010); Serco, Inc. v. United States, 81 Fed. Cl. 463, 494 n .4 8 (2008); see also Ralph C. Nash & John Cibinic, "Cost and Price Analysis: U nd erstand ing the Terms," 9 No. 1 Nash & Cibinic Rep. ¶ 5 (1995) ("The purpose of a price reaso n ab len ess determination is to ascertain that the Government is not paying too high a p r ic e . " ) .
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p rice, others of which focus on individual cost elements ­ cannot be employed rationally if a giv en price proposal fails to include key price/cost elements. See id. at § 15.404- 1(b)(2)(i)-(vii); D M S All-Star, 90 Fed. Cl. at 665 n.13; Serco, 81 Fed. Cl. at 494. That is surely true of the m e th o d that establishes price reasonableness by comparing a given price to those received from co m p etito rs, see 48 C.F.R. § 15.404-1(b)(2)(i) ­ a method that the agency tried to employ here. That method cannot rationally be applied if either the price to be compared or the competitors' p rices that provide the basis for that comparison omit critical cost elements. See generally, 1B Jo h n Cosgrove McBride, Thomas J. Touhey, Government Contracts § 9.30[3][c][i] (2009) (hereinafter "McBride & Touhey") ("Competition generally establishes price reasonableness."). Indeed, this method requires "adequate price competition," which exists only where competitors "su b m it priced offers that satisfy the Government's expressed requirement[s]." 48 C.F.R. § 1 5 .4 0 3 -1(c)(1 ) (defining "adequate price competition"); see also id. at § 15.404-1(b)(2)(ii) (allo w in g prior government prices to be compared with the offers provided if "the validity of the co m p ariso n can be established"); SP Sys., 86 Fed. Cl. at 18. Here, BAE's price on CLIN 006 was so out of kilter with that of its competitors that T reasu ry, by its own admission, could not adjust BAE's price to make it comparable to those of th e other offerors in the competitive range. As a result, the agency could not analyze the reaso n ab len ess of BAE's price using methods that rely upon such comparisons, as it had done in analyzing the prices of EDS and [the third offeror]. Rather, in determining that BAE's price was reason able, the agency had to compare the competitors' individual prices for CLINs other than 0 0 6 and then to review separately whether BAE's CLIN 006 price was reasonable by reference to its "user base expansion" pricing. In the court's view, it is inconceivable that this disjointed ev alu ation approach was envisioned from the start ­ that the agency intended to permit, sim u ltan eo u sly, the use of pricing methodologies that were so fundamentally different as to p reclu d e, for price reasonableness purposes, a rational comparison of competing proposals. Although giving rise, by itself, only to an arriere-pensee, this observation, taken together with th e plain language of the RFP quoted above, leaves little doubt that the agency's interpretation of th e pricing requirements of the RFP, as ultimately applied to BAE's proposal, was no interp retatio n at all, but rather represented a change in the contract's evaluation terms ­ one that, u n d er FAR § 15.206(a), should have been accompanied by a formal modification of the s o lic ita tio n . 2. F a ilu re to Conduct Meaningful Discussions

In its second challenge to the award decision, plaintiff asserts that Treasury was co m p elled to inform the other offerors that it had changed its requirements regarding the pricing o f CLIN 006. It argues that the agency's failure to do so was misleading. EDS also contends tha t Treasury acted arbitrarily in failing to inform it, during discussions, that its disaster recovery C LIN price was too high. A s the parties agree, agencies generally are required to conduct "meaningful" discussions w ith all responsible offerors that submit proposals within the competitive range. See 48 C.F.R.§ 1 5 .3 0 6 (d); see also EP Prods., 63 Fed. Cl. at 226; Dynacs Eng'g Co. v. United States, 48 Fed. C l. 124, 131 (2000) (stating that "[t]he law is well-settled that discussions between a contracting o fficer and offerors must be meaningful"). However, the FAR emphasizes that "the contracting

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officer is not required to discuss every area where the proposal could be improved" and that in stead "[t]he scope and extent of discussions are a matter of contracting officer judgment." 48 C .F.R . § 15.306(d)(3). Under these provisions, as this court once observed, "`[t]he government n eed not discuss every aspect of the proposal that receives less than the maximum score or iden tify relative weaknesses in a proposal that is technically acceptable but presents a less desirable approach than others.'" Cube Corp. v. United States, 46 Fed. Cl. 368, 384 (2000) (q u o tin g ACRA, Inc. v. United States, 44 Fed. Cl. 288, 295-96 (1999)); see also EP Prods., 63 Fed . Cl. at 226-27; JWK Int'l Corp. v. United States, 49 Fed. Cl. 371, 394 (2001), aff'd, 279 F.3d 9 8 5 (Fed. Cir. 2002) ("The procuring agency does not have to identify every item that might im p rov e an offeror's proposal."); Dynacs, 48 Fed. Cl. at 131. Likewise, an agency need not discuss an offeror's price unless the price submitted "`would preclude award to the firm.'" DMS A ll-S ta r, 90 Fed. Cl. at 669 (quoting Gen. Dynamics-Ordnance & Tactical Sys., 2009 C.P.D. ¶ 21 7 (2009)). Nevertheless, when conducting discussions with offerors in the competitive range, th e agency may not "engage in conduct that . . . [f]avors one offeror over another." 48 C.F.R. § 1 5 .3 0 6 (e); see also Kerr Contractors, 89 Fed. Cl. at 329 ("This regulation does not permit a p roc u rin g agency to engage in unequal discussions . . . ."). Plaintiff asserts that because defendant failed to amend the solicitation to reflect new p ricin g requirements for CLIN 006, it necessarily misled EDS when it did not alert the company to that issue. But, there is no basis for such a per se rule ­ one in which every failure to amend in violation of FAR § 15.206 would inevitably lead to a corresponding failure to conduct m e an in gfu l discussions in violation of FAR § 15.306.1 7 Even where an amendment should have b een made, fairness, equality and discretion all remain the controlling guideposts for applying the d iscu ssio n s requirement to the individual facts encountered. See 48 C.F.R. § 15.306(d)(1) ("D iscu ssio ns are tailored to each offeror's proposal . . . ."). Logic ­ and the language of FAR § 1 5 .3 0 6 (d )(3 ) ­ suggest that the failure to amend a solicitation leads to the violation of the d iscu ssio n regulation only where: (i) application of the modified requirement would give rise to an unacceptable deficiency or convert a portion of a proposal into a significant weakness; (ii) the effectiv e modification in requirements is discussed with the awardee, but not with the relevant o ffero r; or (iii) a failure to conduct discussions would prejudicially mislead an offeror. See g en era lly, JWK Int'l Corp. v. United States, 279 F.3d 985, 988 (Fed. Cir. 2002) (describing the req u irem en ts for discussions); ManTech Telecomm., 49 Fed. Cl. at 71. Hence, in a factual co n tex t such as this, whether further or different discussions were required depends upon the im p act of the change on the protestor and the need to maintain equal footing among the offerors in the competitive range. Fu rth er discussions were not required here. The application of the modified pricing req u irem en t did not render any portion of EDS' proposal unacceptable or cause some feature thereof to be classified as a significant weakness. Nor did the agency's actions result in unequal treatm e nt. Perhaps, the latter would have been the case had Treasury told BAE that its pricing
17

Plaintiff, of course, is quite correct that had Treasury amended the solicitation, it w o u ld have been required to notify the offerors. See 48 C.F.R. 15.206(c). But, neither FAR § 15.206 nor FAR § 15.306 treat such a notice as the equivalent of discussions. Compare 48 C .F.R . § 15.306(a)-(b) with id. at §15.306(d) (distinguishing between other types of co m m u n ication s and discussions (or negotiations)).

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ap p ro ach was appropriate, but not told EDS that it could likewise remove items from its price. But, that did not happen. Rather, Treasury informed all the final competitors that their Sample T ask pricing proposals were incomplete and told both EDS and BAE that they should add items in to their pricing ­ multiple items, in the case of BAE, and six printers, in the case of EDS. The d ifferen ce is that EDS chose to follow that advice, while BAE did not, apparently based on the v iew (later vindicated, but ultimately rejected by this court) that its approach was consistent with the RFP's requirements. Nor was plaintiff misled ­ at least not prejudicially so. Treasury's decision to accept BAE's approach, and error in failing to amend the solicitation to reflect this, bo th post-dated discussions ­ in other words, there was nothing wrong with the discussions when th ey occurred. And had Treasury amended the RFP to include a revised pricing requirement and d on e nothing else, it would not have been required to conduct a new round of discussions.1 8 As such , it is hard to see how the "change" in pricing requirements impacted the propriety of either th e discussions that occurred or should have occurred. U n deterred , plaintiff further complains that Treasury violated the FAR by not telling EDS that its disaster recovery CLIN price was "too high," while discussing with [the third offeror] that its overall total price and labor costs were "unreasonably high." But, this contention is at odds w ith itself for while it hinges on the notion that these two offerors were not treated alike, it fails to come to grips with the essential fact that the concerns raised by the agency with respect to the se offerors were not remotely alike. In the case of [the third offeror], the concern regarded its ov erall price, owing, in particular, to the major price component of labor costs. Moreover, that p rice was viewed as so high as to render the proposal potentially unacceptable. EDS' pricing issu es, by comparison, neither involved its overall price nor, correspondingly, threatened the accep tab ility of its offer. Rather, the agency's much more limited concerns focused only on ED S' price as to a single CLIN and involved only competitiveness. That Treasury discussed price with [the third offeror], but not with plaintiff, thus did not give rise to the sort of unequal treatm en t that would violate the FAR.19

In this regard, recall that the RFP stated that "[t]he Government reserves the right to award a contract on the basis of initial offers received, without conducting discussions, in acco rd an ce with Federal Acquisition Regulations (FAR) 52.215-1(f), Contract Award. Therefore, initial offers should contain the offeror's best terms from both a technical and a pricing perspective." See also 48 C.F.R. § 15.306(a)(3) (discussing when awards may be m ad e without discussions); Galen Med. Assocs., 369 F.3d at 1332-33. Plaintiff argues that, to the extent it finds ambiguity in the CLIN 006 pricing or the S LA s that establish the 99.99-percent-availability benchmarks, the court should determine that Treasury failed to conduct meaningful discussions when it neglected to clarify such am biguities. An agency's failure to clarify known ambiguities in an RFP may constitute a b reach of the discussion duty. See Bank of America, 2001 C.P.D. ¶ 137 (2001) (finding a lack of meaningful discussion when the agency failed to clarify a recognized ambiguity in the so licitatio n that led to significant disparity between offers). However, in this case the court h as found no ambiguity in the cited portions of the RFP and thus need not address plaintiff's argu m en t further.
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To be sure, FAR § 15.306(e)(3) gives the contracting officer discretion to inform an offeror that "its price is considered by the Government to be too high or too low." But neither that provision, nor any other, requires the contracting officer to discuss a proposed price that reflects an acceptable technical approach and is not considered a significant weakness or d eficien cy. See Dynacs Eng'g, 48 Fed. Cl. at 133; Public Facility Consortium I, LLC, 2005 C .P .D . ¶ 170 (2005); AJT & Assocs., 2000 C.P.D. ¶ 60 (2000). The Federal Circuit made this am p ly clear in JWK Int'l Corp., making short shrift of the notion that an agency must always d iscu ss prices because their adjustment could materially enhance a proposal's potential for aw a rd . In so concluding, that court reasoned ­ Because both cost and non-cost factors must be considered and the agency has fu ll discretion to rank the importance of the factors, a downward cost adjustment m ay not always affect the award. Therefore, cost is not always material, and does no t automatically mandate discussions. JW K Int'l, 279 F.3d at 988.2 0 Based on these precedents, Treasury was not required to discuss plaintiff's price on its disaster recovery CLIN because the agency had determinated that this price w a s acceptable, albeit too high. Therefore, plaintiff's arguments regarding the lack of m ean in gfu l discussions fail to persuade. 3. E va lua tion of Technical Proposal ­ Data Center

ED S further argues that BAE's proposal did not comply with the SLAs that established 9 9 .9 9 -p ercen t availability for certain data center services, including e-mail, file/print and ap p licatio n transport. It treats as virtually self-evident that the "Tier II" data center offered by B A E could not meet the higher system-availability requirements of the RFP. It was arbitrary and cap ricio u s, EDS further contends, for Treasury to accept BAE's proposal in this regard and co m p lain s that the agency should have assigned an unacceptable rating (or at least not a good ratin g) to BAE's managed services solution factor. But, these claims hinge on several major assum ption s that turn out to be false. First, plaintiff wrongly assumes that the SLAs established solicitation requirements that, like the others in the RFP, had to be fully met by the offerors in their proposals. But, it appears th at the SLAs were different. A review of the entire RFP suggests that their primary, if not ex clu siv e, function was to establish contractual benchmarks for measuring the awardee's future perform ance. In this regard, the RFP indicated that the contract would offer the awardee inc en tiv es for meeting these benchmarks and discentives if it did not ­ an approach that seems to treat compliance with these SLAs more as a matter of contract administration than as something

See also DMS All-Star, 90 Fed. Cl. at 669 ("unless an offeror's costs constitute a significan t weakness or deficiency in its proposal, the contracting officer is not required to ad d ress in discussions costs that appear to be higher than those proposed by other offerors"); Ash Britt, Inc. v. United States, 87 Fed. Cl. 344, 372 (2009); Banknote Corp., 56 Fed. Cl. at 385.

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to be evaluated in the absolute terms that EDS suggests.2 1 Even if EDS was right on this count, B A E's proposal, in fact, offered a series of technical solutions designed to meet these b en ch m arks ­ schematics that not only involved the data center, but also various types of sp ecialized servers and other hardware that would be used, it indicated, in combination with o th er systems to meet the SLA reliability standards