_______________________________________________________
 
         RESPONDENT'S MOTION TO DISMISS GRANTED: July 14, 1995
        _______________________________________________________
 
 
                             GSBCA 13280-P
 
 
                            HSQ TECHNOLOGY,
 
                                                Protester,
 
                                   v.
 
                        DEPARTMENT OF THE ARMY,
 
                                                Respondent,
 
                                  and
 
                        JOHNSON CONTROLS, INC.,
 
                                                Intervenor.
 
        Donald  O. Pratt  and  Paul  H.  Sanderford  of  Canterbury,
   Stuber, Pratt, Elder & Gooch, Dallas, TX, counsel for Protester.
 
        Craig R. Schmauder, Richard C. Frank, and  Scott M. McCaleb,
   U.S. Army Corps of Engineers,  Washington, DC; and Larry E. Beall
   and  Gary  A.  Moore,  Office  of Counsel,  U.S.  Army  Corps  of
   Engineers, Mobile, AL, counsel for Respondent.
 
        James P. Gallatin, Jr., Joseph Brooks, and Peter  J. Barrett
   of  Popham Haik  Schnobrich  &  Kaufman,  Ltd.,  Washington,  DC,
   counsel for Intervenor.
 
   Before Board Judges PARKER, HYATT, and WILLIAMS.
 
   WILLIAMS, Board Judge.
 
        Respondent has moved to  dismiss the instant protest  on the
   ground that the  Board lacks jurisdiction because  the underlying
   procurement falls within the exception to the Federal Information
   Resources  Management  Regulation  (FIRMR)  for upgraded  Federal
   Information Processing (FIP) resources that will be used in or as
   embedded FIP resources.  The procurement is for an upgrade of the
   Facility    Management   System    (FMS),[foot #] 1   which    is
   also known as a  Utility Control System (UCS), to be installed in
   the Irwin Army  Hospital at Ft. Riley, Kansas.  The  new FMS will
   provide  upgraded monitoring  and  controlling of  the hospital's
   heating,  ventilation,  and   air  conditioning  (HVAC)   system.
   Respondent  contends that the FIP resources comprising the system
   will be used  as embedded equipment in the hospital, which is not
   itself automatic data  processing equipment (ADPE), and  that the
   FIP  resources fall  within the  upgrade exception to  the FIRMR.
   Respondent's Reply Memorandum at 24.
 
 
        The  upgrade  exception  is  a  follow-on  to  the  embedded
   exception   and  provides  that  the  FIRMR  does  not  apply  to
   replacement or upgrades  of embedded FIP resources  regardless of
   cost.   59 Fed. Reg. 66202,  66203  (1994)  (to  be  codified  at
   41 CFR   1.002-2(g)).   The  embedded exception  exempts embedded
   FIP  resources which  are an  integral  part of  a product  which
   itself  is  not  ADPE  --   resources  which  would  have  to  be
   substantially modified to be used  other than as an integral part
   of the product or which constitute less  than 20% of the value of
   the  product  or  cost  $500,000,  whichever  is  lower.     Id.,
     1.002-2(f).
 
        Respondent's argument harks  back to the 1975  renovation of
   the hospital.  At that time a newly automated HVAC monitoring and
   control system  was installed  in  the course  of renovating  the
   hospital, and it is the upgrade of that automated system which is
   the subject  of this procurement.   Respondent contends  that the
   embedded  exception  would  have been  met  in  1975 because  the
   automated HVAC control system, which cost approximately $300,000,
   was embedded in  the hospital expansion which  cost approximately
   $20,000,000.   Thus, respondent  contends that  because the  1975
   acquisition of  the automated  HVAC would  have met  the embedded
   exception at that time, the instant procurement meets the upgrade
   exception now.
 
        The  Board convened  a hearing  on June  6, 1995,  to elicit
   factual testimony explaining the  nature of the procurement.   At
   respondent's  request,  the  Board  asked  the  General  Services
   Administration  (GSA) for an  advisory opinion as  to whether the
   procurement  was within the upgrade  exception.  GSA attended the
   hearing,  and  based  upon  a  review  of  the  solicitation  and
   information  obtained at the  June 6 hearing, GSA  concluded that
   this procurement falls within the upgrade exception.
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 1     The   solicitation   defined   the   facility
   management system as follows:  "A  system made up of one or  more
   digital Control Units which provide  climate control, maintenance
   management, energy  management and  utility monitoring  functions
   for [a] complete operation of [a]  facility.  Control units in  a
   system may be linked in  a communications network composed of one
   or more levels of local  area networks."  Protest File, Exhibit 3
   at 13812-5.
 
                   ----------- FOOTNOTE ENDS -----------
 
 
 
        For the reasons stated below,  we agree and grant the motion
   to dismiss.
 
                            Findings of Fact
 
   The Existing Facilities Management System
 
        The original  Irwin Army  Hospital  was built  in 1955,  and
   contained an HVAC system operated by standard pneumatic controls.
   Transcript  at  11-25,  34.    In 1975,  the  Army  undertook  an
   expansion  project  which  essentially doubled  the  size  of the
   hospital.   Id.  at 10.   As  part of  the  expansion project,  a
   Johnson  Controls, Inc. (JCI) system, the JC/80/35, was installed
   to monitor the HVAC systems throughout the hospital from a remote
   station.   Id. at  9-16.   The total  cost of  the expansion  was
   $20,000,000,  and the JC/80/35  system portion cost approximately
   $300,000.  Id. at 11.
 
        The Irwin Army Hospital's current system for monitoring HVAC
   in    the    hospital     includes    four    workstations,     a
   JC/85/40[foot #] 2   and    DSC-8500   panels    throughout   the
   hospital that  are  wired to  pneumatic  control systems  on  the
   heating  and air  conditioning equipment  and  valves to  monitor
   other  points throughout  the hospital.   Transcript  at 12;  see
   Respondent's Hearing Exhibits A-K.  One of  the four workstations
   is  in the hospital.   Transcript at 13.   The existing pneumatic
   controllers measure the air temperature that is being provided to
   the  system.  Id.  at 14-15.   The chief of the  energy branch at
   Ft. Riley explained how the current system works:
 
             With the  system that's installed right  down, the
        DSC 8500  would  interface  with  a  typical  hot  deck
        controller. .  . .   It  would measure  the temperature
        separately  because it  uses  a  different  type  of  a
        sensor, not a pneumatic sensor.  It interfaces with the
        pneumatic  controller by being  able to adjust  the set
        point  by changing  it slightly  two  or three  degrees
        either way.   And it would  also measure the  pneumatic
        air  pressure that went to the  control valve, and that
        pneumatic pressure is converted to an electronic signal
        which corresponds to the valve position.  So the system
        that  [is]  currently  installed  in  there  will  one,
        measure the air temperature being supplied; [and] . . .
        [adjust]  the set point  on the pneumatic  control, and
        also can measure where the position of the valve is.
 
 
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 2     There  were  several upgrades  to  the system
   since  1975; in  1984 the  JC 80/35 was  upgraded to  a JC 85/40.
   Transcript at  11-12.  The  85/40 also controls the  operation of
   twenty-seven other buildings at Ft. Riley and will continue to do
   so after the upgrade envisioned by this procurement.  Id. at 22.
                                                         ___
 
                   ----------- FOOTNOTE ENDS -----------
 
 
 
        Q    [C]an  you explain to  us how the  system performs
        these different functions?
 
        A    The  temperatures  are  read  with  an  electronic
        signal.   The electrical output  is sent to a pressure-
        to-electric or  electric-to-pressure signal to  the set
        point,  a pressure-to-electric  set  point coming  back
        into the DSC 8500.   The DSC 8500 takes  these electric
        signals and stores them into its memory and passes them
        back  to the JC 85/40  for other uses  and information.
        So the operator can, from the workstation or at the DSC
        8500,  make adjustments to change the  set point and to
        read the temperatures and valve position.
 
   Transcript at 17-18.
 
   The System Being Acquired
 
        Under  this  procurement,  the Government  is  procuring  an
   upgraded utility control system -- new  technology which does the
   same  thing  as  the  prior  technology,  but  more  efficiently.
   Transcript  at  45.   Both  the  new and  the  prior  systems are
   automated.  Id. at  93.  The contractor will be  replacing all of
   the  DSC-8500  control  panels  in  the hospital.    Id.  at  22.
   Additionally, the  pneumatic controls  to which  the DSC-8500  is
   connected  will  be  replaced and  upgraded  with  direct digital
   controls.  Id. at 44-45.  The hospital will be  disconnected from
   the  JC/85/40 system, but the 85/40 will still be used to control
   operation of twenty-seven other  buildings at Ft. Riley.   Id. at
   22.
 
        The  chief of  the energy  branch  explained the  difference
   between the system being acquired and the existing system:
 
             The new system has more distributed processing and
        the  new workstations will  have some programs  in them
        . . . --   the  new  system   does  not  rely   upon  a
        minicomputer  like  the  old 85/40  does.    The actual
        control  units  in  the hospital  have  memory  in them
        that's called distributed processing.  The workstations
        also  contain some of the  memory or programs for these
        workstations -- or the control  units, and if a control
        unit were to lose part of its memory because of a power
        outage or malfunction, the program would  be downloaded
        from the workstation into the new control unit.
 
        . . . .
 
             The new workstation  will not be connected  to the
        85/40.
 
   Transcript at 27-28.
 
        The  chief of  the  energy  branch  testified  that  certain
   components of the  system being acquired  such as remote  control
   units (RCUs), laser printer, and tape drive could be taken out of
   that system and  used at another location.   Transcript at 70-72.
   He  stated that  a remote  control unit  was essentially  a small
   computer which  could be  unplugged and "used  as an  RCU [remote
   control  unit] someplace  else, [but]  [n]ot .  . .  for anything
   other than what  the application programs  and the equipment  and
   things that  are tied into it."   Id. at 70.  With  regard to the
   possible relocation of  the communications process, the  chief of
   the energy branch testified:
 
        It depends on what the contractor provides, . . . you'd
        have  to go back through  the specification to see what
        the minimum  requirements were,  and what the  contract
        actually provides, and  what it can be used.   I'm sure
        that it could be moved, and still fulfill the functions
        that were described in the specification[s].
 
   Id. at 72.
 
        The chief  of the energy  branch also testified that  if the
   Army were building a new  hospital today it would include  an FMS
   system.  Transcript at 111.  He explained:
 
        Because of the  complication, and the  inter-connection
        of  all  the systems,  the  interrelationship of  these
        systems, you just don't have  the people any more to go
        in, and individually control, and adjust, . . . without
        a remote  -- or a  work station, or a  monitoring alarm
        system.
 
   Id.
 
   The Solicitation
 
        On  August 16,  1994,  the  U.S.  Army  Corps  of  Engineers
   (Corps),  Mobile District,  issued  Request  for Proposals  (RFP)
   number DACA01-94-R-0127.  The RFP gave the following "Description
   of Work":
 
        The contractor shall furnish, install and interface the
        existing   utility  infrastructure   at  the   Facility
        Management  System (FMS) for  the Irwin  Army Community
        Hospital at Fort  Riley, Kansas.  The  installed system
        shall  be   configured  as  a   distributed  processing
        network.   All automatic  controls provided  under this
        project shall utilize  Direct Digital Control  (DDC) to
        provide the required sequence of utility monitoring and
        management operations.
 
   Protest  File, Exhibit 3,   00200  at 2.   More specifically, the
   RFP required that:
 
             The   Contractor   shall  furnish   the   Facility
        Management System (FMS)  described in the  accompanying
        drawings,  configured   as  a   distributed  processing
        network of control and monitoring functions as shown in
        the Input/Output Summaries, specified  in the Sequences
        of Operations or  otherwise required to  accomplish all
        operational   sequences  specified.     All   automatic
        controls  provided   under  this   specification  shall
        utilize direct  digital  control (DDC)  to provide  the
        required sequence of  operation unless shown otherwise.
        No pneumatic control  logic will be allowed  except for
        specifically  identified   safety  or   limit  devices,
        although pneumatic actuators  may be used for  valve or
        damper applications. .  . .   The system shall  provide
        operator interaction and  dynamic process manipulation,
        including overall system supervision, coordination, and
        control.  Sensed data shall be obtained by a network of
        Remote  Control Units  (RCU),  Auxiliary Control  Units
        (ACU),  and Unitary  Control Units  (UCU), collectively
        referred  to as  Control Units (CU),  using instruments
        and controls interfaced to mechanical, utility  systems
        and  other systems as shown and specified.  The Central
        Operator's station shall  communicate with all  Control
        Units (CU) using  the Data Transmission Media  (DTM) as
        shown  on the  accompanying  drawings and  specified in
        Paragraph: DATA TRANSMISSION MEDIA (DTM).
 
   Id.   13812 at 8-9.
 
        The  RFP required  replacement of  the  existing system  and
   stated:
 
        The  existing  control  system for  the  Hospital  is a
        Johnson  Controls DSC-8500  based  installation.   This
        system provides supervisory control and monitoring of a
        Johnson Controls  pneumatic control system.  Under this
        project,  the FMS Contractor  shall remove the existing
        control installation and  replace it with a  new Direct
        Digital FMS system, as defined by these  specifications
        and  the accompanying drawings.  Contractor may, but is
        not required to,  incorporate existing control  devices
        in  his  new   installation,  as  described  in   these
        specifications,   provided   they   comply   with   the
        requirements  for  such  devices   and  the  Contractor
        complies with all  other project requirements.   At the
        completion of this project, there  shall be no "old" or
        "existing"  control system.   The new FMS  installed by
        the  Contractor shall  be THE  control  system for  the
        Hospital.
 
   Protest File, Exhibit 3,   13812 at 14.
 
                               Discussion
 
        The  Board  is  authorized to  consider  protests  involving
   certain  procurements for  "automatic data  processing equipment"
   (ADPE)  by federal agencies.  40 U.S.C.   759(f)(1) (1988).  ADPE
   is defined as:
 
        any equipment or interconnected system or subsystems of
        equipment  that is used  in the  automatic acquisition,
        storage, manipulation,  management, movement,  control,
        display,   switching   interchange,   transmission,  or
        reception, of data or information-
             (i)  by a Federal agency, or
             (ii) under a contract with a Federal agency which-
                  (I)  requires the use of such equipment, or
                  (II) requires the performance of a service or
                  the  furnishing   of  a   product  which   is
                  performed or produced  making significant use
                  of such equipment.
 
   40 U.S.C.A.    759(a)(2)(A) (West Supp.  1995).   The Brooks  Act
   further  states that the term ADPE includes "related resources as
   defined  by regulations issued  by the Administrator  for General
   Services."  Id.   759(a)(2)(B)(v).
 
        Pursuant to its authority under  the Act, GSA has issued the
   FIRMR,  41 CFR    201-1.000,  201-1.003(a)  (1991).    The  FIRMR
   applies  to  "[t]he  acquisition,  management,  and  use  of  FIP
   resources,"  a term generally  recognized to be  coextensive with
   ADPE,  by  federal   agencies.    FIRMR 201-1.002-1(a).     If  a
   procurement meets one  of the exceptions in the  FIRMR, the Board
   lacks  jurisdiction over  a  protest involving  such acquisition.
   See Best Power  Technology Sales Corp. v. Austin,  984 F.2d 1172,
   1176-78 (Fed. Cir. 1993).
 
        Respondent contends that the  Board lacks jurisdiction  over
   the instant  protest because the  ADPE being acquired  here falls
   within two related  exceptions in  the FIRMR:   (1) the  embedded
   exception  and (2) the upgrade exception.  The embedded exception
   provides:
 
        The   FIRMR   does  not   apply  to   the  acquisition,
        management, and use of products containing embedded FIP
        equipment when:
 
             (1)  The embedded  FIP equipment would  need to be
        substantially  modified to  be used  other  than as  an
        integral part of the product, or
 
             (2)  The  dollar   value  of   the  embedded   FIP
        equipment is less than $500,000 or less than 20 percent
        of the value of the product, whichever amount is lower.
        Embedded  FIP equipment  is FIP  equipment  that is  an
        integral  part  of  the product,  where  the  principal
 
        function   of  the   product  is   not   the  automatic
        acquisition,    storage,    manipulation,   management,
        movement,  control,  display,  switching,  interchange,
        transmission,  or reception of data or information.  In
        an acquisition  where multiple  products are  acquired,
        the exception applies to each discrete product.
 
   FIRMR   201-1.002-2(f) (1994), as  amended by FIRMR  Amendment 3,
   59 Fed. Reg. 66,202-03 (1994).  The upgrade exception provides:
 
             The  FIRMR  does  not  apply  to  the acquisition,
        management, and use of FIP resources that will  be used
        in or as embedded FIP resources (equipment, software or
        supplies)  in  products  excepted  from FIRMR  coverage
        under   201-1.002-2(f).     This   exception   includes
        replacement or upgrades of the embedded  FIP resources,
        regardless of cost.
 
   I d .     ( t o    b e     c o d i f i e d    a t     4 1   C F R
     201-1.002-2(g)).[foot #] 3
 
        At  the request  of  respondent,  the  Board  solicited  the
   opinion  of GSA  regarding whether  the FIP  equipment  under the
   instant  procurement was subject to the Brooks  Act.  In a letter
   of June 13,  1995, GSA  advised the  Board of  its view  that the
   equipment  being  procured   fell  within  the   embedded/upgrade
   exception.  GSA explained the exception as follows:
 
        Simply  stated,  55  Fed. Reg.  66,202  (1994) excludes
        upgrades  and replacement  of  embedded FIP  resources.
        . . .   [T]he  provision  .  .  .  merely  attempts  to
        articulate  the   common  sense   application  of   the
        Administrator's   determination   that   embedded   FIP
        resources  regardless of  when they are  acquired, that
        is, as part  of the original acquisition or  as a later
        separate  acquisition, are  not subject  to  the Brooks
        Act.    Under  the  Brooks Act,  the  function  of  the
        equipment and/or  its relationship to a  larger product
        guide Brooks Act applicability.
 
        GSA  explained its rationale for concluding that the instant
   procurement was within the upgrade exception as follows:
 
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 3     On  December 23,  1994, GSA  published  FIRMR
   Amendment 3 as  a final rule  in the  Federal Register.   In that
   notice, GSA stated that the  effective date of the regulation was
   January 23, 1995.   The  regulation did not  specify that  it was
   applicable  only to solicitations issued  after that date, and we
   deem the regulation  applicable to this procurement.   Bradley v.
                                                          __________
   School  Board of  the  City  of Richmond,  416  U.S. 696,  711-16
   ________________________________________
   (1974);  Central Freight Lines,  Inc. v. United States,  669 F.2d
                   ----------- FOOTNOTE BEGINS ---------
   1063, 1069 (5th Cir. 1982).
 
                   ----------- FOOTNOTE ENDS -----------
 
 
 
        Based upon  the furnished solicitation sections and the
        information obtained from the June 6, 1995 hearing, the
        procurement  for the  replacement  of  the  UCS  to  be
        installed  at the Irwin  Army Hospital falls  under the
        intent,  if not  the  literal  words,  of  the  upgrade
        exception.     The  UCS,  like  the  HVAC  systems  and
        utilities  which it  will monitor,  will  be a  virtual
        fixture   of  the  hospital.    The  UCS  function  and
        relationship  to the  hospital will  be the same  as it
        would  have been (advances in technology aside) had the
        UCS  been  part  of the  original  construction  of the
        hospital.   To  the  extent  that the  UCS  would  have
        qualified   as   embedded    FIP   for   the   original
        construction,  that   qualification  should   apply  to
        subsequent UCS upgrades and replacements.
 
        An  interpretation  or   application  of  the   upgrade
        exception that  requires that actual  exception of  the
        original product  leads to  irrational results  and was
        not  the  intent   of  the  drafters  of   the  upgrade
        exception.    Under  such  a   view,  procurements  for
        identical  equipment  performing   identical  functions
        would  be distinguished for  Brooks Act purposes solely
        on  the  basis  of  the date  of  the  construction  or
        acquisition  of  the  facility.    Clearly,  a hospital
        constructed in  the 1950s  would not  have as  original
        equipment  ADPE controlled  HVAC  and utility  systems.
        The  modernization of such a facility and its continued
        upgrading  demands  the   addition  of  technologically
        current systems.   Since this upgrade process  seeks to
        incorporate within the facility the same modern systems
        that  are  included in  current  hospital construction,
        there is no basis to  exempt the latter from Brooks Act
        coverage  while insisting that later added and upgraded
        systems  to older hospitals  are subject to  the Brooks
        Act.
 
        Accordingly,   to   the  extent   that   procured  ADPE
        constitutes embedded FIP resources, such resources  are
        exempt from FIRMR and Brooks Act coverage regardless of
        the  presence  or  absence  of  embedded  ADPE  in  the
        original facility.
 
   Letter  from Margaret Truntich,  Director, Center for  Policy and
   Regulations Management, GSA, to the Board at 2-3 (June 13, 1995).
 
        As the  starting point  for our inquiry  as to  whether this
   procurement is subject to the  Brooks Act, we look to the  nature
   of  the  products specified  in  the  solicitation.   Best  Power
   Technology  Sales  Corp.  v.  Austin,  984 F.2d  at  1176.    The
   solicitation here calls for the contractor to furnish and install
   a  replacement  facility  management system  for  the  Irwin Army
   Hospital which  interfaces the  existing utility  infrastructure.
   This system was previously  automated and is being upgraded  with
   automatic controls  utilizing direct digital control (DDC) logic.
   Respondent admits that "the  FMS as a whole is ADPE," but asserts
   that this ADPE "will be  embedded into the Irwin [Army] Hospital,
   replacing and upgrading the .  . . UCS."  Respondent's Motion  to
   Dismiss for Lack of Jurisdiction at 22.  Respondent contends that
   the procurement is within the  upgrade exception because the 1975
   renovation  of the  hospital included  an  automated control  and
   monitoring  system for  the  HVAC  which  was "embedded"  in  the
   hospital  itself at  that time.   Thus, respondent  contends that
   because  the  1975  installation of  the  automated  HVAC control
   system  would  have  met  the  embedded exception  in  1975,  the
   replacement   of   that   system    today   meets   the   upgrade
   exception.[foot #] 4
 
 
        While  at first  blush,  it  may appear  unusual  to view  a
   building such as a hospital as a "product" within the  meaning of
   the  FIRMR, a  review  of  example  four in  FIRMR  Bulletin A-1,
   Attachment C,  indicates that  such  was  the  intention  of  the
   drafters.  Example four provides:
 
        A  Federal  agency initiates  a  contracting  action in
        which  the  solicitation  requires  the  contractor  to
        construct  a 20-story building.   The solicitation does
        not  explicitly require the use of FIP resources during
        the construction  process or delivery  of FIP resources
        for  the use of  the Federal  agency as  a part  of the
        completed building.    However,  it  is  reasonable  to
        assume  that  the  contractor  will use  FIP  resources
        during   the  construction   process  (e.g.,   tracking
        building materials)  and  that many  of the  building's
        features  (e.g., elevators  and environmental  systems)
        will be  controlled by  embedded FIP  equipment.   With
        respect  to the embedded FIP equipment, it is important
        to  note that the exceptions to FIRMR applicability, as
        set  forth  at   201-1.002-2,  were  considered  by the
        agency.   Since  the dollar  value of the  embedded FIP
        equipment is expected to be less than $500,000 and also
        less than 20  percent of the value of  the building, an
        exception  to   FIRMR  applicability  exists   for  the
        embedded FIP equipment.
 
   FIRMR Bulletin A-1, Attachment C, Example 4.
 
        Thus,  in  this  example a  newly  constructed  building was
   construed to  be a "product" in  which the very  same type system
   being  acquired here,  an  environmental control  and  monitoring
   system, was  deemed to be an  integral part of the  building, and
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 4     The   embedded  exception   did  not   become
   effective    until   August 27,    1990,   FIRMR    Amendment 19,
     201-1.103(d)(5),  55 Fed. Reg. 30,702, 30,705  (1990), and  the
   definition  of "embedded  FIP equipment"  was  added some  months
   later.  See 55 Fed. Reg. 53,386, 53,412 (1990).
           ___
 
                   ----------- FOOTNOTE ENDS -----------
 
 
   "embedded," and therefore exempt --  as long as it was  less than
   20% of the value of the building or cost less than $500,000.  The
   express  mention of  a virtually  identical type  of a  system as
   embedded in  a building in  FIRMR example four persuades  us that
   the 1975 installation would have met the embedded exception.
 
 
        Protester relies on Science Applications International Corp.
   v. National Aeronautics and  Space Administration, GSBCA 12600-P,
   et al.,  94-1 BCA    26,553, 1993  BPD   328,  to argue  that the
   embedded exception  does not  apply.   Protester's Memorandum  in
   Opposition to Government's Motion to Dismiss at 12.  In SAIC, the
   Board concluded that the Government was purchasing automation for
   an  existing  wind  tunnel  and  that the  very  purpose  of  the
   procurement was automation.  SAIC,  94-1 BCA at 132,134, 1993 BPD
     328, at 9.   The Board noted that the SAIC procurement was "for
   the automation system, not for a product  containing an automated
   system."  SAIC, 94-1  BCA, at 132,135, 1993 BPD 328,  at 11.  The
   instant  procurement is  distinguishable.    In  this  case,  the
   Government did acquire a non-ADPE product containing an automated
   system  --  a building  expansion  into which  an  automated HVAC
   monitoring and control system was embedded in 1975.  The embedded
   exception would thus  have been met in conjunction  with the 1975
   expansion of the  hospital because the automated  HVAC monitoring
   and  control system  was being  installed in  conjunction with  a
   larger construction, which was not ADPE.
 
        Further,  SAIC did not address the recent upgrade exception,
   as this exception was not then in effect.   But it is the upgrade
   exception  coupled with the embedded exception which exempts this
   procurement from FIRMR coverage, as the upgrade exception exempts
   upgrades of  embedded FIP  resources regardless of  cost.   FIRMR
   Amendment 3,  59 Fed. Reg. 66,202  (1994)  (to   be  codified  at
   41 CFR   201-1.102-2(g)).
 
        Once we conclude that the 1975 automated HVAC control system
   would  have  met  the embedded  exception,  it  follows  that the
   upgrade exception also applies in  this instance -- what is being
   procured  is  a  technologically  advanced  HVAC  monitoring  and
   control  system   to  replace  an   automated  system  previously
   installed as an integral part of a non-ADPE product.
 
        In  reaching this  conclusion, we  have  taken into  account
   GSA's opinion and explanation of  the intent of its  implementing
   regulations.    Although  the  Brooks  Act  provides  that  a GSA
   advisory  opinion shall  not be  binding on  the Board,  both the
   Board and the General Accounting  Office have given the decisions
   of  GSA's   Administrator  due  weight  in   determining  whether
   procurements were for  ADPE.  See 40 U.S.C.    759(f)(5)(A) (West
   Supp.  1995); e.g. Pindar  Donnelly Partnership v.  Department of
   Commerce,  GSBCA 12667-P, 94-2 BCA   26,673, at 132,688, 1994 BPD
     4,  at 25; Bulloch International, Inc., GSBCA 10997-P, 91-2 BCA
     23,737,  at 118,880-01, 1991  BPD   27, at  9-10; Ebon Research
   Systems,  B-253833.2, et al.,  93-2 CPD    270,  at 4-5  (Nov. 3,
   1993).   In  concluding  that the  FIP  resources being  procured
   constitute  embedded   equipment  and  fall  within  the  upgrade
   exception,  GSA  reasoned  that  the  system  being  acquired  is
   virtually a fixture  of the hospital and its  relationship to the
   hospital now is essentially the same as it  would have been under
   the  original construction.   GSA  recognized  that although  the
   system for monitoring HVAC which  was installed originally in the
   hospital  would not have been automated, the follow-on technology
   installed  in  the  course  of  a  major  hospital  renovation is
   automated and remains an integral part of the hospital.
 
 
        GSA pointed out  that there is  no basis for  distinguishing
   new  systems  embedded  in current  hospital  constructions  from
   upgrades  of  those  original  systems  being  converted  to  new
   technology.   As the agency  charged with promulgating the FIRMR,
   GSA is uniquely  experienced to articulate the  policy underlying
   those regulations.  GSA has done so here.  In its  opinion letter
   to the Board, GSA stated:  "An interpretation [of] or application
   of the  upgrade exception that  requires the actual  exception of
   the original product leads to  irrational results and was not the
   intent of the drafters of the upgrade  exception."  Letter to the
   Board from Margaret Truntich, dated June 13, 1995, at 3.
 
        We  do  not suggest  that  the upgrade  exception  should be
   applied  expansively  to  exempt  automated  systems  in  federal
   facilities  from Brooks  Act  coverage.   In  order  to meet  the
   embedded exception  as well as the upgrade  exception, the system
   currently being  acquired must have  been capable of  meeting the
   embedded  exception  at   the  time  the  embedded   product  was
   originally installed, and must be an integral part of and perform
   an integral function in the product in which it is embedded.
 
        The dissent would  declare the upgrade regulation to be null
   and void as being  inconsistent with the  Brooks Act.  While  the
   Brooks  Act  does  give  this  Board  "the  authority  to  review
   regulations  to  determine  their   consistency  with  applicable
   statutes," 40 U.S.C.   759(f)(1) (West Supp. 1995), that Act also
   vests exclusive authority in the  Administrator of GSA to provide
   ADPE  "suitable  for  efficient  and  effective  use  by  Federal
   agencies . . . through  purchase, lease, transfer  [of] equipment
   of  other  federal agencies,  or  otherwise.  .  .."   40  U.S.C.
     759(b)(1)  (1988).  Pursuant to  his authority under the Brooks
   Act, the  Administrator of GSA  has promulgated the FIRMR.   "The
   FIRMR  system  is  established  to  publish  and  codify  uniform
   policies  and  procedures  pertaining  to  information  resources
   management activities  by Federal  agencies."   FIRMR   201-3.101
   (1990).  As the FIRMR  further notes:  "GSA's Governmentwide role
   in  information  management  stems from  its  records  management
   authorities  and responsibilities under the National Archives and
   Records  Administration  Act of  1984  ([P.L.] 98-497,  44 U.S.C.
   Ch[apter] 29), and  its responsibilities under Section 111 of the
   Federal  Property and  Administrative Services  Act  of 1949,  as
   amended (40 U.S.C. 759),  to provide  for economic  and efficient
   acquisition of Federal  information processing (FIP)  resources."
   FIRMR   201-6.001(5)(b) (1990).
 
        The  Brooks Act contemplates  that the Administrator  of GSA
   will    define   resources   to    be   included   within   ADPE.
   40 U.S.C.A.   759(a)(2)(B)(v) (West Supp. 1995).  The Act confers
   upon  the Administrator broad  powers "to coordinate  and provide
   for the economic  and efficient .  . . lease, and  maintenance of
   [ADPE]  by Federal agencies."  40 U.S.C.   759(a)(1) (1988).  The
   legislative    history   expressly    recognizes   that    "[t]he
   Administrator of GSA  is authorized to exempt  individual systems
   from  provisions  of  this program  to  avoid  compromise  of our
   national   security  or  defense   and  to  assure   economy  and
   efficiency."   H.R.  Rep. No. 802,  89th  Cong., 1st  Sess. at  6
   (1965) (emphasis added); see also 111 Cong. Rec. H4845 (daily ed.
   Sept. 2, 1965) (statement  of Rep. Brooks), which  confirms GSA's
   authority to issue appropriate regulations:
 
        The purpose  of the bill  is to provide a  perimeter of
        organizational  responsibility  and authority.    It is
        neither  necessary   nor   possible   to   provide   in
        legislative form detailed statutory instructions to all
        officials  of  government  involved  in automatic  data
        processing  management.   Traditionally,  Congress  has
        approached  problems  of   this  kind  through  general
        delegations providing that the  agencies involved shall
        issue appropriate regulations which can be altered from
        time  to time  as  changes  in  circumstances  and  new
        problems or opportunities for more efficient operations
        arise.
 
   Id. at  22823.   Here, we  cannot say  that the  decision of  the
   Administrator to promulgate a regulation which continues to apply
   the embedded exception  to upgrades and replacements  exceeds the
   statutory  authority  vested in  him  by  the  Brooks Act.    The
   application of the upgrade exception  to a monitoring and control
   system  for a  hospital's HVAC  system does  extend to  ADPE, but
   overall  does not  compromise the  purpose of  the Brooks  Act of
   ensuring   efficient   ADPE   management   in   Government,   and
   coordinating  ADPE acquisition among  federal agencies.  Contrary
   to  the  dissent's suggestion,  the HVAC  controls do  not become
   unembedded  simply   because  they  wear   out  or  need   to  be
   technologically enhanced.
 
        It  is  well  established  that an  administrative  agency's
   regulations made  pursuant to statutory rulemaking authority will
   be  upheld unless they  are arbitrary, capricious,  or manifestly
   contrary  to statute.    E.g., Chevron  U.S.A.,  Inc. v.  Natural
   Resources  Defense Council,  Inc.,  467  U.S.  837,  844  (1984).
   Further,  regulations  will   be  upheld  if  they   represent  a
   legitimate, reasonable, and direct adjunct to the power expressly
   conferred  by statute  even  if  not  within  explicit  statutory
   authority.   United States v.  Chesapeake and Ohio  Railroad Co.,
   426  U.S. 500  (1976).   According to  GSA's opinion  letter, the
   upgrade  exception was intended to insure consistent treatment of
   procurements  of identical equipment  being acquired, on  the one
   hand, today  in the first  instance as part of  a larger non-ADPE
   product  or,  on  the  other  hand, being  acquired  today  as  a
   replacement of a similar  predecessor product embedded in  a non-
   ADPE  product.   We  would  be hard  pressed  to characterize  as
   irrational GSA's efforts to apply uniform, consistent  regulatory
   treatment to products with identical functions.
 
 
        This said, we  realize that the dissent raises  a good point
   -- as  a matter  of policy, the  replacement or  upgraded product
   should perhaps no longer be deemed to be "embedded" because it is
   now the subject of a stand alone acquisition for ADPE and  not an
   internal component of a larger product.  Moreover, certain of the
   system's   computer    equipment   components    (certainly   the
   workstations  and printer)  can  function  equally  well  in  any
   environment.      While   the   question  "Should   stand   alone
   upgrades/replacements  of  embedded  equipment  which  are   ADPE
   continue to be deemed embedded?"  could be answered either way to
   promote  varying policy considerations,  it has been  answered by
   the agency charged with implementing the Brooks Act in a rational
   manner.  That policy may not  be one with which we agree, but  we
   cannot  say  it is  inconsistent  with the  Brooks Act.    As the
   United States  Court  of  Appeals for  the  District  of Columbia
   Circuit has recognized:  "This [tribunal] is not to inquire as to
   whether the agency's decision is wise as a policy matter; indeed,
   we are  forbidden 'from substituting  [our] judgment for  that of
   the agency.'  Ethyl Corp. v. EPA,  541 F.2d 1, 34 (D.C. Cir.) (en
   banc)  cert. denied sub  nom. E. I.  du Pont de  Nemours & Co. v.
   EPA, 426 U.S. 941 (1976)."   Association of American Railroads v.
   Interstate  Commerce Commission,  978 F.2d  737,  740 (D.C.  Cir.
   1992).
 
        The  excepting   of  certain  circumscribed   categories  of
   procurements  from GSA  oversight is  a matter  of policy,  not a
   matter  of an  agency  departing from  its  statutory charter  or
   lacking  a  rational  reason  for  a  regulation.   The  embedded
   exception has the rational basis of enabling agencies to  procure
   products  with  embedded  ADPE in  a  single  procurement without
   segregating  out   the   FIPs  resources   components   of   such
   procurements.    The  upgrade  exception  has  the  rationale  of
   continuing  an established regulation  in effect since  1990 (the
   embedded  exception)  and   treating  follow-on  procurements  of
   embedded ADPE in the same fashion as original procurements.
 
                                Decision
 
        Respondent's motion  to dismiss is GRANTED.  This protest is
   DISMISSED FOR LACK OF SUBJECT MATTER JURISDICTION.
 
 
 
                                      ____________________________
                                      MARY ELLEN COSTER WILLIAMS
                                      Board Judge
 
   I concur:
   ____________________________
   CATHERINE B. HYATT
   Board Judge
 
   PARKER, Board Judge, dissenting
 
 
        I  respectfully dissent from  the opinion of  my colleagues,
   not because their  analysis is wrong, but  because the regulation
   which they apply to reach their result, FIRMR 201-39.101-3(b)(7),
   is  irrational and totally inconsistent with the Brooks Automatic
   Data  Processing (ADP)  Act.   I would  strike it  down  and deny
   respondent's motion to dismiss for lack of jurisdiction.
 
        There  is  no  dispute  that the  Government  is  buying ADP
   equipment which,  except for  a GSA-created  exception, would  be
   subject to the Brooks ADP Act.   One of GSA's regulations,  FIRMR
   201-39.101-3(b)(6), says  that ADP equipment which  is "embedded"
   in something  else is exempt  from the Act.   Another regulation,
   FIRMR  201-39.101-3(b)(7),  then  goes  on  to  say  that if  ADP
   equipment  was  once  embedded  in  something  else,  it  remains
   embedded, even  when it is no  longer embedded.   In other words,
   when the  Government buys a  computer system, standing  alone, it
   doesn't have to follow the Brooks  ADP Act if the computer system
   is upgrading or replacing one that was once  purchased as part of
   a building.
 
        This rule is absurd for  several reasons.  First, the Brooks
   ADP  Act  contains  no  exception  for  ADP  equipment  which  is
   "embedded"  in   something  else.     The  Act   uses  the   word
   "significant"  to  describe  the  amount  of  ADP  necessary  for
   application  of the  Act to  a  Government contract.   40  U.S.C.
     759(a)(2)(A) (West Supp.  1995).  The concept  of significance,
   of course, makes perfect  sense.  If the  Government is buying  a
   building which happens to  contain some ADP equipment, it  should
   follow  the rules  for  buying  a building,  not  for buying  ADP
   equipment.  The ADP equipment being  purchased is not significant
   compared to the building.   But if the Government  is just buying
   the ADP equipment,  shouldn't it follow the rules  for buying ADP
   equipment, rather than the rules for buying a building?
 
        Even if we accept as rational GSA's regulatory exception for
   "embedded" ADP equipment, GSA's "once embedded,  always embedded"
   exception makes  no sense.  GSA's explanation for this regulatory
   exception is as follows:
 
             the  provision  .  .  .  merely  attempts  to
             articulate  the common  sense application  of
             the   Administrator's   determination    that
             embedded  FIP  resources regardless  of  when
             they  are acquired, that  is, as part  of the
             original acquisition or  as a later  separate
 
             acquisition,  are not  subject to  the Brooks
             Act.
 
   Majority opinion at  8.  But the reason  the "embedded" equipment
   was exempted in  the first place  was not because of  the special
   character   of   the   equipment[foot #] 5,   but   because   the
   ADP equipment  was being purchased  as part of a  larger, non-ADP
   procurement for which  it would not have made sense  to apply ADP
   procurement   rules.    Once   similar  equipment   is  purchased
   separately --  the computer  system without  the building  -- the
   justification   for  an  exception   from  the  Brooks   ADP  Act
   disappears.   A regulation  like FIRMR  201-39.101-3(b)(7), which
   creates a  regulatory exception  which is  inconsistent with  the
   purpose of the  Act pursuant to which it  was promulgated, cannot
   stand.  I would strike it down.
 
                                      _____________________
                                      ROBERT W. PARKER
                                      Board Judge
 
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 5     To  the extent  the  "embedded" exception  is
   really attempting to  create an exception for  so-called "special
   purpose"  ADP  equipment,  it is  clearly  inconsistent  with the
   intent  of  the  Brooks  ADP  Act.    The  Act  contains no  such
   exception;  in fact,  it was  amended in 1986  to add  a detailed
   definition  of ADP equipment  which clarified the  application of
   the Act to "the full range of resources used in the  creation and
   operations of automated systems and subsystems."  H.R. Conf. Rep.
   No. 1005, 99th Cong., 2d Sess. 776 (1986).