_________________________________
 
                         GRANTED:  August 4, 1992
                   _________________________________
        
                             GSBCA 11857-P
 
                             WILTEL, INC.,
                                               
                                                 Protester,
                                  and
 
                  MCI TELECOMMUNICATIONS CORPORATION,
 
                                                Intervenor,
 
                                   v.
 
                    GENERAL SERVICES ADMINISTRATION,
 
                                                 Respondent,
 
                                  and
 
                       AT&T COMMUNICATIONS, INC.,
 
                                                Intervenor.
 
        David  W.   Burgett,  Douglas  R.   Duberstein,  William  A.
   Bradford, and Pierre  M. Donahue of Hogan  & Hartson, Washington,
   DC, and  Patricia E. Martin  of WilTel, Inc., Tulsa,  OK, counsel
   for Protester. 
 
        Robert  Koehler, Mary  Beth  Bosco,  Curtis  V.  Gomez,  and
   Michael J. Schaengold  of Patton, Boggs  & Blow, Washington,  DC,
   and  Robin L.  Redfield  of MCI  Telecommunications  Corporation,
   Washington,  DC, counsel  for  Intervenor MCI  Telecommunications
   Corporation.
 
        George  Barclay,  Michael  J.  Ettner,  and  Seth  Binstock,
   Personal  Property Division, Office  of General  Counsel, General
   Services Administration, Washington, DC, counsel for Respondent.
 
        Thomas C. Papson  and Daniel E. Johnson of  McKenna & Cuneo,
   Washington, DC,  and  Jonathan  S.  Hoak, G.  Ridgely  Loux,  and
   Michael  R. Greene of  AT&T Communications, Inc.,  Silver Spring,
   MD, counsel for Intervenor AT&T Communications, Inc.
 
   Before Board Judges HENDLEY, NEILL, and PARKER. 
 
   HENDLEY, Board Judge.
 
        On  March   4,  1992,   respondent,  the  General   Services
   Administration  (GSA),  and  intervenor,   American  Telephone  &
   Telegraph  Communications, Inc.  (AT&T),  modified the  ten-year,
   comprehensive FTS2000 contract to include a service called T-3, a
   "dedicated"  telephone service  that  can  send  data  and  voice
   signals through fiber-optic cable at the state-of-the-art rate of
   45 million bits per second.  Such speed is sufficiently rapid and
   accurate for two  supercomputers to communicate, and  for federal
   workers to tap into the supercomputer programs with ease.  
 
        Protester,  Wiltel,  Inc.  (Wiltel),   and  intervenor,  MCI
   Telecommunications  Corporation  (MCI),  contend  that  the   T-3
   service  is an independent, severable service that respondent did
   not include  in the  original FTS2000 contract  in 1988  to avoid
   restricting those  carriers which,  in 1988,  could provide  T-3.
   Thus, the protester contends that  the respondent and AT&T  could
   not add this  nearly $100 million service to  the contract merely
   by issuing  a "modification," but instead should have conducted a
   competitive  procurement to  buy T-3.    We agree  and grant  the
   protest.
 
   The Underlying Solicitation and Contracts
 
        1.   On December 31, 1987, GSA  issued request for proposals
   (RFP)  number  KET-JW-87-02   for  "comprehensive  long  distance
   telecommunications services  to the  federal agencies,"  known as
   the FTS2000 procurement.  Transcript at 356.  After Congressional
   intervention,  the solicitation was "split into being two awards;
   60 percent  to one  offeror and 40 percent  to another."   Id. at
   357.   Respondent  then  split  the contract  by  assigning  each
   Federal agency to  one carrier or the  other.  AT&T Protest  File
   Supplement,   Exhibit  1  at  C-15.    The  FTS2000  solicitation
   described the program as follows: 
 
        This contract  is for  telecommunications services  for
        the  FTS2000 program.  The FTS2000 program will replace
        the   existing   intercity   switched   voice   Federal
        Telecommunicacations   System    (FTS)   and    provide
        additional and enhanced telecommunications capabilities
        to the Federal Government.  The FTS2000 program will be
        mandatory  for all federal agency activities subject to
        P.L. 89-306  [the Brooks  Act], as  implemented by  the
        Federal  Information  Resources  Management  Regulation
        (FIRMR).
 
   Id. at C-15.
 
        2.   The  solicitation  also   described  broad  procurement
   objectives, to wit:
 
        The  FTS2000  procurement  is  designed  to   meet  the
        following government objectives:
 
             a.   To   obtain  a   comprehensive  set   of
             telecommunications services
 
             b.   To obtain telecommunications services through
             two  prime  service  contractors  responsible  for
             providing all services and network management
 
             c.   To          accurately          forecast
             telecommunications  costs   over  a   10-year
             contract period
 
             . . . . 
 
             f.   To encourage competition between the two
             FTS2000 services  contractors as  a means  of
             ensuring  continued  improvements  in FTS2000
             services and prices.
 
   AT&T Protest File Supplement, Exhibit 23A.
 
        3.   Section  C  of the  FTS2000 solicitation  addressed the
   performance  specifications for  two  types of  telecommunication
   services -- Switched  and Dedicated --  which were grouped  under
   six general service headings:
 
             C.2.2  Switched Voice Service
 
             C.2.3  Switched Data Service
 
             C.2.4            Switched       Digital      Integrated
   Service[foot #] 1
 
             C.2.5  Packet Switched Service
 
             C.2.6  Video Transmission Service
 
             C.2.7  Dedicated Transmission Service
 
   AT&T Protest File Supplement, Exhibit 1, Section C.
 
        4.   Those  in  the  trade distinguish  the  three  types of
   dedicated  transmission service (DTS)  by the differences  in the
   rate  at  which  they  can transmit  data.    Respondent expected
   customer  agencies  to use  "analog"  DTS to  transmit  voice and
   analog data between FTS2000 locations at rates up to 4.8 kilobits
   per second (kbps = thousands of bits per second) and at 9.6 kbps,
   then use "digital" DTS to transmit  digital data between agencies
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 1     Under this  heading, the two carriers were to
   provide switched digital integrated service at the rapid T-1 rate
   of data  transmission,  which is  1.544 million  bits per  second
   ("mbps"),  later as  part  of  the  Integrated  Services  Digital
   Network ("ISDN").
 
                   ----------- FOOTNOTE ENDS -----------
 
 
   at rates of 9.6 kbps, 56 kbps and 64 kbps.  They  would use "T-1"
   DTS for  dedicated, nonchannelized  transmission between  FTS2000
   locations  at the  rate  of  1.544 megabits  per  second (mbps  =
   millions of bits per second).  Protest File, Exhibit 1D.  The DTS
   speeds  specified in  the  solicitation  were  those  that  long-
   distance carriers were offering commercial customers between 1987
   and 1988.  Transcript at 548.
 
 
        5.   Paragraph  H-16   of  the  solicitation   was  entitled
   "Service Improvements."  It stated, in pertinent part:
 
        a.   After contract award, the Government may  solicit,
        and   the   Contractor   is   encouraged   to   propose
        independently, improvements to  the services, features,
        or  other   requirements  of   the  contract.     These
        improvements  may be proposed to save money, to improve
        performance,  or for any other purpose which presents a
        service advantage  to the Government.   As part  of the
        proposed changes,  the Contractor shall submit  a price
        proposal  to  the Contracting  Officer  for evaluation.
        Those proposed service improvements that are acceptable
        to the government will be processed as modifications to
        the contract.
 
        . . . . 
 
        e.   If a proposal submitted pursuant to this clause is
        accepted and applied  to this  contract, the  equitable
        adjustment increasing or decreasing  the contract price
        shall  be  in  accordance with  the  procedures  of the
        "Changes" clause.   The resulting contract modification
        will state that it is made pursuant to this clause.
 
   Protest File, Exhibit 1A.  Respondent asked  the FTS2000 offerors
   to comment on this  clause, Transcript at 359, and they voiced no
   objections.  
 
        6.   In  paragraph  L.37.4.4  of  the  solicitation,  titled
   "Additional Features/Items," respondent encouraged offerors to:
 
        offer additional features  and items not  identified in
        the price schedules provided in  the RFP, but which the
        offeror normally supplies to its other customers.
 
   MCI/Wiltel Protest File Supplement, Exhibit 3B.  Offerors were to
   explain   why  they  were   suggesting  each  item   and  provide
   corresponding  unit  prices.   Id.    In  response, AT&T  offered
   additional  features and  items  under five  of  the six  service
   categories in the procurement.  In the DTS area it  proposed five
   additional items, including T-3.   Protest File, Exhibit 2B at 1-
   9(f),     1-10.         Both     US     Sprint     and     Martin
   Marietta[foot #] 2  also   proposed   one  or   more   items   in
   response  to L.37.4.4,  and  the  Martin-Marietta/MCI team,  like
   AT&T,  proposed  adding  T-3.    AT&T  Protest  File  Supplement,
   Exhibit 4   at   L.3-1    to   a-2;   id.,   Exhibit 5    at   D-
   1.[foot #] 3  
 
 
        7.   GSA did not accept, or  even evaluate, any of these "L-
   37"  additional  features  or  items,  like  T-3,  that  offerors
   proposed.    Transcript   at  360-61.    Instead,   due  to  time
   constraints, the agency  only used offerors' responses  to clause
   L.37.4.4  as a  market  survey,  but did  not  negotiate for  the
   inclusion of these items to the contract.  Id.; AT&T Protest File
   Supplement, Exhibit 3.
 
        8.   In  December  1988,   respondent  awarded  the  FTS2000
   ten-year[foot #] 4    contracts    to   AT&T    and    US Sprint.
   AT&T  Protest File  Supplement,  Exhibit  1 at  C-15.   AT&T  won
   contract  number GS00K89AHD0008 for  Network  A,  the 60  percent
   portion  of FTS2000.   Protest File, Exhibit 3  (contract award).
   The contract is for fixed prices and indefinite  quantities, with
   a minimum guarantee of $270 million for the 60 percent contractor
   and  a maximum  of $15  billion.   AT&T Protest  File Supplement,
   Exhibit 1 at H-5. 
 
   High-Speed T-3 Service
 
        9.   T-3 service  is a dedicated  telecommunications service
   (DTS) which transmits  voice and data signals at a rate of 44.736
   mbps between  two points.   Transcript at 690; AT&T  Protest File
   Supplement,  Exhibit 45F.  T-3 service transmits signals 28 times
   faster than T-1 and 672 times faster than a  voice grade circuit.
   Transcript at 690-91; AT&T  Protest File Supplement, Exhibit 45F.
   T-3 service is now commercially  available and popular, and  both
   protester  and MCI offer it.  Id.,  Exhibit 44; Transcript at 73-
   74, 281-85, 315.  Protester markets analog, digital, T-1, and T-3
   services as  part of a  "package" or "range" of  dedicated trans-
   mission  services.    Id.   at  72,  75-76;  AT&T   Protest  File
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 2     Between 1987  and 1988,  MCI participated  in
   the  FTS2000 procurement  only as  a  subcontractor teaming  with
   Martin-Marietta.
 
        [foot #] 3     Interestingly,  protester  Wiltel  had  begun
   installing T-3 circuits in 1985.  Transcript at 58.
 
        [foot #] 4     Clause H-14 of the FTS2000 contract  requires
   respondent to  conduct a  recompetition between  the two  winning
   carriers, AT&T and US Sprint,  after they complete the fourth and
   seventh years of the contract work.   Protest File, Exhibit 1  at
   H-14.  This  recompetition may lead to US Sprint  taking over the
   larger Network A (60 percent) portion of the contract,  depending
   on the prices each carrier offers.
 
                   ----------- FOOTNOTE ENDS -----------
 
 
   Supplement, Exhibits 29, 30.  MCI, too,  markets analog, digital,
   T-1,  and T-3  services as  part of  a "range"  or  "spectrum" of
   dedicated transmission services.  Id., Exhibits 16-18; Transcript
   at 326, 331.  AT&T markets and   views T-3 as part of a family of
   DTS services  known as  the "Accunet family  of services."   AT&T
   Protest File Supplement, Exhibits 25, 27; Transcript at 550, 629.
 
 
        10.  Higher speed transmission services, such as T-1 or T-3,
   carry much  more information than  do lower speed services.   The
   high speed services, dedicated or not, are either "unchannelized"
   or  "channelized."  Customers generally purchase the higher speed
   transmission services to support  applications which slower speed
   phone lines cannot  transmit adequately.  For  example, customers
   can use  T-3 to transmit  data between supercomputers at  a rate,
   and  of a  character, that  T-1 lines  cannot carry.   MCI/WilTel
   Protest File  Supplement, Exhibit 29 at 5-6.   If a customer uses
   much  or  all  of  a  T-1  or  T-3  line  for  such  "bit-hungry"
   supercomputer applications,  the customer must  leave the service
   whole, or "unchannelized." Transcript at 134-35.
 
   Nature of Dedicated Transmission Services
 
        11.  Because dedicated  transmission services  only transmit
   between  two specific  points and  are available  for use  at all
   times, customers purchase them only if they sustain a high volume
   of traffic between  two specific points.   Transcript at  343-45,
   634-36.  While it is technically possible to route a transmission
   beyond the end  point of the dedicated line  to another location,
   id.  at 578-79, the government has no need or plans to do so, id.
   at 636, 772.  
 
        12.  The Dedicated T-3 lines consist of three parts.  
 
        (1)  The Local Exchange  Company (LEC), usually  a Bell
        Operating Company (BOC),  provides the connection  from
        the  customer premise  to  the long-distance  carrier's
        "point of presence."  Transcript at 557.  This LEC link
        is known  as the  "originating access  portion" of  the
        dedicated line.  Id. at 479.  
 
        (2)  An  interexchange carrier,  such  as WilTel,  MCI,
        AT&T, or Sprint,  acts as a "backbone"  by transmitting
        the  data long-distance between  the two LECs.   Id. at
        558.  
 
        (3) The last portion of a dedicated line, or "terminat-
        ing access" to the customer site at the other end, is a
        mirror image of the first portion.  Id.  
 
   The originating  and terminating  access together constitute  the
   local  access portion  of  the system.    Id. at  557-59.   As  a
   technical matter, WilTel, Sprint, MCI,  and AT&T can provide  T-3
   dedicated  transmission  services   without  disrupting  existing
   FTS2000 services.  Id. at 508-09.
   T-3 Service Compared to T-1 Service
 
 
        13.  The  carriers  provide  T-3  service  nigh  exclusively
   through fiber-optic cable.  Transcript at 779, 604.  T-1 service,
   on the  contrary, is  "provided basically on  copper in  a copper
   environment."   Id.  at 460-61,  124, 129.   An  expert commented
   that: "You  have  a copper  environment versus  an optical  fiber
   environment."   Id. at  502.   Nonetheless,  most local  exchange
   companies  have begun  installing  fiber  optic  cable  into  new
   commercial and  federal buildings.   Id. at 224-32.   Besides the
   fact that  signals can  travel at the  T-1 rate  quite adequately
   over  copper, while  they  cannot  at the  T-3  rate, the  "pulse
   width,"  "pulse shape,"  and "jitter"  of  T-3 signals  are quite
   different from T-1's.   Id. at 753-54.   Moreover, the "overhead,
   the bits  that are used to keep track of  what all is going on in
   the network, [is] different on a T-1 and a T-3."  Id.
 
        14.  The T-3 rate  of transmission can support  some "vastly
   different" applications  than even  a large  bundle of  T-1 lines
   could, including some that T-1 cannot transmit at all, or carries
   very  poorly.  MCI/WilTel Protest File  Supplement, Exhibit 29 at
   5-6; Transcript  at 529-30,  759.   These different  applications
   include the supercomputer mainframe applications that are largely
   at issue  here, as well  as broadcast quality  video applications
   and three-dimensional  computer visualization  (imaging) applica-
   tions.  Id. at 164.
 
        15.  Customers purchase T-3 and T-1  services separately and
   carriers market them separately, albeit as  part of "families" of
   dedicated services.  Transcript at 285, 549-50.  T-3 is in no way
   derived  from T-1.   The carriers, and  local exchange companies,
   such as  C&P Telephone, provide  the T-3 rate of  transmission by
   adding  hardware   called  "multiplexers"  to  buildings.     The
   multiplexers combine,  or aggregate,  slow speed  voice and  data
   calls  into  a high-speed  data  stream.    Id. at  265,  750-53.
   Multiplexing many calls into a single, rapid flow (to the layman,
   somewhat  paradoxically) increases the  carrying capacity  of the
   long-distance backbone, since it reduces the  total time that the
   backbone is in use. 
 
        16.  Modification  PS95,  quoting  the  changed  pages  from
   AT&T's proposal, explicitly states that analog, digital, T-1, and
   T-3 are all "independent" and "separate" services, and that "each
   is designed  to provide  a different type  of service."   Protest
   File,  Exhibit 21  at 5.1.7-1 to  -2; Protest File,  Exhibit 5 at
   5.1.7-1.
 
   Using T-3 Service to Aggregate T-1 service
 
        17.  All agree  that T-3  service can  carry aggregated  T-1
   lines.  For  example, long-distance carriers aggregate  T-1 lines
   into  T-3  lines  to form  their  long-distance  "backbones" that
   criss-cross the  United States.  Transcript at  205-06.  However,
   we  find that  the federal  agencies  would use  the T-3  service
   covered by  Modification PS95 primarily to support supercomputing
   applications.  They are not  likely to buy the hardware necessary
   to  "be [their]  Own  Bell," i.e.  use multiplexing  and channel-
   banking machinery to  combine all of the slower  rate phone lines
   into one high-rate line, as  the local exchange carriers like C&P
   Telephone do  at large office  buildings to save  money.  Id.  at
   698.  Indeed,  AT&T's own expert acknowledged that  he was unsure
   "whether it is  wise or  not" to try  to act  as one's own  phone
   company,  id., and  stated  that  he had  little  or no  personal
   knowledge that the agency customers were actually planning such a
   course, id. at 636, 772.    We further find that it  will rarely,
   if ever,  be economical for  even large federal  installations to
   aggregate  672 voice-grade lines  from a single  point to another
   single point.   The expert witness for MCI  testified that almost
   no one  but a long-distance  carrier would use  unchannelized T-3
   for  such aggregation.   Id.  at  205-07.   Another witness  also
   testified that he was  aware of only one MCI  T-3 customer, other
   than carriers, that channelized its own T-3 line to aggregate T-1
   lines.  Id. at 334-35.
 
   Changes Clause
 
 
        18.  The FTS2000 contract's "Changes" clause, 48 CFR 52.243-
   1 (Alt. II) (1990) (FAR 52.243-1, Alt. II), provides that:
 
        (a)  The  Contracting  Officer  may  at  any  time,  by
        written order, and  without notice to the  sureties, if
        any,  make changes  within the  general  scope of  this
        contract in any one or more of the following:
 
             (1)  Description of services to be performed.
 
             (2)  Time of performance (i.e., hours of  the
             day, days of the week, etc.)
 
             (3)  Place of performance of the services.
 
             (4)  Drawings,  designs,  or   specifications
             when the supplies  to be furnished are  to be
             specially manufactured for the Government, in
             accordance  with  the drawings,  designs,  or
             specifications.
 
             (5)  Method   of  shipment   or  packing   of
             supplies.
 
             (6)  Place of delivery.
 
        (b)  If  any such change causes an increase or decrease
        in  the cost of, or  the time required for, performance
        of any part of the work under this contract, whether or
        not changed by the order, the Contracting Officer shall
        make an equitable adjustment in the contract price, the
 
        delivery  schedule,  or  both,  and  shall  modify  the
        contract.
 
        (c)  The  Contractor  must  assert  its  right  to   an
        adjustment  under this clause  within 30 days  from the
        date of receipt of the  written order.  However, if the
        Contracting Officer decides that the  facts justify it,
        the  Contracting Officer  may receive  and  act upon  a
        proposal  submitted   before  final   payment  of   the
        contract.
 
        (d)  If the Contractor's proposal  includes the cost of
        property made  obsolete or  excess by  the change,  the
        Contracting Officer shall  have the right to  prescribe
        the manner of the disposition of the property. 
 
        (e)  Failure  to agree  to any  adjustment  shall be  a
        dispute under the Disputes clause.  However, nothing in
        this clause shall excuse the Contractor from proceeding
        with the contract as changed.
 
   GSA did not  attempt to, nor did it,  obtain authority to deviate
   from  the  Federal  Acquisition Regulation  with  respect  to the
   Changes clause.  Transcript at 365-67.
 
   Contract Modification No. PS95
 
        19.  On March 4, 1992, AT&T formally  submitted its proposal
   to  GSA to  modify AT&T's  FTS2000 contract  by adding  a service
   improvement   entitled    "DTS   Unchannelized    T45[foot #] 5."
   Protest File, Exhibit  5.  AT&T proposed  adding T-3 as a  fourth
   type  of  dedicated  transmission service  (DTS).    The proposal
   offered  pricing   for  T-3   service  between   thirty  specific
   locations,  based on  a  forecast  that  AT&T's  marketing  group
   conducted.  Id., Exhibits 5, 37; Transcript at 598-99.  
 
        20.  GSA  evaluated the technical  and contractual merits of
   AT&T's  proposal,  decided  that   federal  agencies  needed  T-3
   service,  and concluded  that T-3  was  within the  scope of  the
   FTS2000  contracts.  Transcript at 421-25, 453-61.  GSA's written
   In-Scope Determination noted:
 
        In  reviewing  agency  requirements  (NASA,  NIH,  EPA,
        etc.),  it  became   apparent  that  AT&T's   dedicated
        transmission  service offering  under  FTS2000 can  not
        satisfy all of the requirements of these agencies.
 
        . . . . 
 
 
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 5     T45 and DS-3 are the same as T3 service.  All
   three terms are used interchangeably in the industry.
 
                   ----------- FOOTNOTE ENDS -----------
 
 
 
        The  proposed DTS access to Unchannelized T45 speed, at
        the 44.736 Mbps (DS3) rate, will provide end users with
        enhanced, high-volume, data transmission, and is  fully
        compatible   with   the    existing   FTS2000   Network
        Architecture.    This  functionality   is  required  by
        several Government agencies.  T45 Service (T-3 service,
        as identified  in the commercial  environment) provides
        for an increased transmission speed to 44.736 Mbps.
 
        . . . .
 
        The  DTS T45 feature  is a fiber-optic  technology that
        presently  resides  within   existing  FTS2000  network
        technology and architecture  but is  not accessible  by
        FTS2000  users.   The proposed  access to  the DTS  T45
        feature will fulfill  high-volume bit rate requirements
        of  federal agencies  and allow  agency subscribers  to
        more   fully   utilize   existing   data   transmission
        technology.
 
   Protest File, Exhibit 9 at 5-6.
 
        21.  After respondent completed its "in-scope" determination
   in  record time,  it and  AT&T  on March 31,  1992, entered  into
   Modification PS95,  "a bilateral modification  to incorporate  an
   enhancement feature to the  Dedicated Transmission Service" under
   AT&T's FTS2000 contract.   Protest File,  Exhibit 21 at 3.   This
   modification  initially would make  T-3 service available  at the
   thirty locations described in  AT&T's proposal.  Id.,  Exhibit 5;
   Transcript  at  672-73.   Although  AT&T  submitted  its proposal
   pursuant  to  the  "Improvements"  clause,  the  carrier  in  its
   technical  proposal characterized  T-3, as  well  as the  Analog,
   Digital  and Unchannelized  T-1  Services,  as "four  independent
   services," and as "four separate services," Protest File, Exhibit
   5 at  5.1.7-1.   Moreover, AT&T acknowledged  that "each  [of the
   four  services] is  designed  to  provide  a  different  type  of
   service," with its own individual architecture.  Id.  
 
        22.  The maximum dollar limitation of AT&T's contract is $15
   billion, Protest File, Exhibit 3  at 2, and this modification did
   not raise  that maximum  dollar amount.   However, it  raised the
   estimated dollar amount of the contract by $99,454,620, the value
   of the modification.  With the modification,  the total estimated
   contract  value  is $5  to $8  billion.   Id.,  Exhibit 21  at 6;
   Transcript  at 474.  The modification's estimated value therefore
   falls  between 1.2  percent and  1.9  percent of  the total  AT&T
   estimated  contract value.   Transcript  at  474.   In May  1992,
   dedicated  transmission service  represented about 13  percent of
   total AT&T contract revenues.  Respondent's Exhibit 2.    
   The In-Scope Determination
 
 
        23.  Although  respondent usually  takes about  200 days  to
   approve a  contract modification, it  completed Modification PS95
   in just 27 days.   Transcript at 486-87.  GSA  began the approval
   process  by preparing a  document entitled "Technical  Aspects of
   Scope   Determination."    Id.  at  422-23,  453;  Protest  File,
   Exhibit 8.   Respondent prepared  this document under  an FTS2000
   expert's supervision,  id. at  454, and  the Contracting  Officer
   relied on it to determine that the modification was in scope, id.
   at 422, 442-43.
 
        24.  The Technical  Aspects of Scope  Determination, Protest
   File, Exhibit 8 at 5, demonstrates that respondent concluded that
   T-3 was simply an improvement to, or enhancement of, T-1 service.
   This     document  characterizes  T-3  "[a]s  an  improvement  on
   existing, T-1 Carrier type digital service."  Transcript at  445.
   The  document   also  demonstrates   that  respondent's   FTS2000
   officers'  belief  that  T-3  was simply  an  improvement  to  or
   enhancement  of T-1  service  led  respondent  to  conclude  that
   Modification  PS95 was within the scope  of the FTS2000 contract.
   Protest File, Exhibit 8 at 5.
 
        25.  Likewise,  respondent's  contracting  officer testified
   that she thought that: "T-3 service is just a whole bunch  of T-1
   lines put together."  Transcript at 439.  The contracting officer
   conceded that this belief affected her decision that Modification
   PS95  was within  the  scope of  the  FTS2000 contract.    Id. at
   439-40.  She also admitted that  this belief led her to  conclude
   that  the modification  was  within  scope.   Id.  at  446.   The
   contracting  officer  for  the  initial  FTS2000  award  likewise
   testified to her  belief that  "T-3 is  T-1.  It  is an  enhanced
   version of T-1."  Id. at 396.
 
        26.  At  paragraph  C.2.7,  under  the  descriptive  heading
   "Dedicated Transmission  Service," the  solicitation listed  only
   three independent and separate dedicated services:  
 
        1)   Analog, 
 
        2)   Digital, and
 
        3)   Unchannelized T-1.  
 
   AT&T  Protest File  Supplement,  Exhibit  1 at  Section  C.   The
   contract's  glossary  stated  that  the  "Dedicated  Transmission
   Service" meant:  "private-line transmission  of voice  and data."
   Id. at Section J-16.  
 
        27.  The FTS2000 solicitation also listed basic telecommuni-
   cation services and required bidders  to price each basic service
   separately, as follows: 
        "Basic  service"  is  defined  as  service  whose price
        excludes  all features that are identified to be priced
 
        separately.     Offerors  shall  propose   fixed  price
        schedules  for   all  specified   basic  services   and
        features.
 
   AT&T Protest  File Supplement,  Exhibit 1  at Section B.1.2.   No
   definitions  of  "service"  or  "basic  service"  appear  in  the
   solicitation's Glossary.  Id. at Section J.1.  
 
        28.  However,  the  FTS2000  solicitation  separately  lists
   three basic  Dedicated Transmission  Services, under  the heading
   "Dedicated  Transmission  Service,"  again  Analog,  Digital  and
   Unchannelized  T-1 Services.   The  solicitation listed  specific
   characteristics  and performance  requirements for each  of these
   basic  services.   AT&T  Protest  File Supplement,  Exhibit  1 at
   Section  J.  However,  it did not list  any such requirements for
   the  whole family of  "dedicated transmission services."   Id. at
   Section B.8.
 
        29.  Besides listing services, such as analog,  digital, and
   T-1 grouped in  the DTS family, the solicitation  also listed the
   "features" that a service might include.  Thus, a "feature" was a
   subset of a service, defined as follows:  
 
        Features may  be either  an integral  capability or  an
        additional  enhancement to  a  service.   All  features
        integral  to a  service  must  be  available  when  the
        service is first made available.  
 
   AT&T  Protest  File  Supplement, Exhibit  1  at  Section C.2.1.2.
   Features were either 1) mandatory, or 2) mandatory optional.  Id.
   at C-20.   For example, the Section  C, Table of Contents,  lists
   features  for:  1)  Switched  Voice  Service,  2)  Switched  Data
   Service,  and 3)  Packet Switched  Service  and Compressed  Video
   Transmission, Id.  at C-4 to  C-7.  The solicitation  also listed
   "mandatory optional" features for the ISDN, a service not  widely
   available to, or desired by, commercial customers in 1988.  
 
        30.  Pursuant to Clause H-16, "Service Improvements," either
   the  Government or the  Contractor could propose  improvements to
   the services or features:
 
        After contract award,  the Government may solicit,  and
        the Contractor is  encouraged to propose independently,
        improvements  to  the  services,   features,  or  other
        requirements of  the contract.  These  improvements may
        be proposed to  save money, to improve  performance, or
        for  any   other  purpose  which  presents   a  service
        advantage to  the Government.   As part of the proposed
        change, the Contractor shall submit a price proposal to
        the Contracting Officer for evaluation.
 
   AT&T Protest File Supplement, Exhibit 1 at  H-16. Although adding
   an  improvement could  be a proper  "change" under  the "Changes"
   clause, the  parties agree that "neither the 'Changes' clause nor
   H-16  allows  changes   outside  the  scope  of   the  contract,"
   Transcript at  368, and  H-16 does  not expand  the scope of  the
   "Changes"  clause, id.  at  370.   Under the  descriptive heading
   "Dedicated Transmission  Service," respondent could  improve only
   the  three   enumerated  basic  services  (Analog,   Digital  and
   Unchannelized T-1) pursuant to the "Improvements" Clause H-16. 
 
 
        31.  AT&T  internal   documents,  from   1991  through   the
   modification execution, acknowledged that:
 
        unchannelized T45 service was not part  of the BAFO and
        will be  treated  as  a  new service  with  the  latest
        performance objectives.  
 
   MCI Protest File Supplement, Exhibits  50A at 31, 50B at 25,  50C
   at 30, 50D at 9, 50E at 9.
 
        32.  Respondent  justified  merely   modifying  the  FTS2000
   contract by adding unchannelized T-3  by noting, inter alia, that
   AT&T's T-3 transmits  signals at the same near-45  Mbps rate that
   AT&T  already used  to provide  long-distance  service along  its
   "backbone" under the contract.  Respondent also found that AT&T's
   T-3 service would: "provide end users with enhanced, high-volume,
   data  transmission, fully  compatible with  the existing  FTS2000
   Network Architecture."   GSA concluded  that AT&T's Unchannelized
   T45 Service was  an "enhancement," a  "value added feature,"  and
   "an  improvement"  on existing  T-Carrier  type digital  service.
   Protest File, Exhibit 8 at  5.  Likewise, the Contracting Officer
   determined that T-3 is a  "feature" which could be included "into
   the  basic FTS2000 contract Dedicated Transmission Service" as an
   "improvement  to existing contract requirements."  Id., Exhibit 9
   at 7.
 
        33.  Respondent  and  AT&T  calculated  the  prices  in  the
   modification, not on the basis of any increased cost to AT&T, but
   on the basis of market or  tariff prices.  Protest File, Exhibits
   13, 17.  The pricing of the modification was done on the basis of
   the existing tariffs.   In short, the modification  was priced as
   if AT&T were a sole source for T-3 service.  Id.
 
        34.  Respondent issued Modification PS95 without competitive
   bidding, although competition in the market among providers of T-
   3 service is fierce.  Transcript at 60, 488-89, 509.
 
                               Discussion
 
   The Changes Clause
 
        Analyzing  cases interpreting  the "Changes"  clause is  not
   particularly  helpful  or  edifying.   Nor  can  any  attempt  at
   analysis   exceed  the  factual  underpinnings  of  the  case  in
   question, since  the results  are  very much  "fact driven,"  and
   differ as  substantially as do  the products and  services across
   the  spectrum of  the  federal  inventory.    Nonetheless,  these
   "Changes" clause hold that: 
 
        [P]reservation  of  the  integrity of  the  competitive
        procurement  system requires  that contracting  parties
        not make changes to contracts  which have the effect of
        circumventing  the  competitive  procurement  statutes.
        [citations  omitted]  This principle is violated when a
        modification so  substantially changes  the purpose  or
        nature of  a contract that  the contract for  which the
        competition was held  and the contract  which is to  be
        performed are essentially different.
 
   Memorex, 61 Comp. Gen. 42 (1981), 81-2 CPD   334.  In the instant
   case,  this essential  concern  for  the competitive  procurement
   system seems pointedly applicable.   We find that respondent  has
   attempted, through  a modification, to acquire a  new service, at
   its  commercial  price,  rather  than  at  the  incremental  cost
   difference  between T-3 and T-1.  Such a change exceeds the ambit
   of   the  Changes  clause,  or  the  FTS2000  contract's  Service
   Improvements Clause, H-16, since respondent's own regulations, 48
   CFR 6.3 (1990) (FAR 6.3), require agencies to treat modifications
   for work  outside the scope  of a contract as  a new procurement.
   Businessland, Inc.,  GSBCA 8586-P,  86-3 BCA    19,268,  1986 BPD
     143.
 
        We  have concluded  that Modification  PS95  is outside  the
   scope of FTS2000 after considering four basic factors involved in
   changes that the  Comptroller General,  in its  long exercise  of
   protest jurisdiction,  has identified:   the degree of  change in
   the (1) pricing  of the service; (2) the schedule for delivery of
   the service; (3) the type of service the contractor would need to
   perform;  and  (4)   whether  the  bidders,  and   the  incumbent
   contractor, reasonably would have expected the changed work to be
   within the  scope of the contract, plus  "Changes clause," during
   the competition. See Neil R.  Gross & Company, B-237434, 90-1 CPD
      212,  at 3  (Feb.  23,  1990),  aff'd on  reconsideration,  B-
   237434.2,   90-1   CPD        491   (May   22,   1990)[foot #] 6;
 
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 6     While rulings by the Comptroller General  are
   not  binding   upon  this  Board,  they   nonetheless  constitute
   "persuasive authority."  Laser Digital, Inc., GSBCA 10810-P, 91-1
                            ___________________
   BCA   23,499, at 117,847, 1990 BPD   373, at 5.
 
                   ----------- FOOTNOTE ENDS -----------
 
 
   American  Air  Filter  Company,  57  Comp.  Gen.  285,  aff'd  on
   reconsideration, 57 Comp. Gen. 567 (1978).
      
 
        Applying these principles,  we first note that the  "type of
   work"   that   T-3   can  provide,   such   as   transmission  of
   broadcast-quality  videos,  medical  imaging,  and  supercomputer
   communications, is "work" that T-1 cannot perform.   Second, AT&T
   priced the  "change" using tariff, or market  prices, rather than
   by proposing to charge respondent only the incremental difference
   in cost between providing a T-1 and  a T-3 line.  Third, we  find
   not only that  the solicitation did not advise  the offerors that
   respondent intended  to purchase  T-3, but  also that  respondent
   rejected their offers to do so in the original procurement.  
 
        The Board  previously has applied  these same criteria  to a
   Brooks   Act,  and  even   an  FTS2000,  procurement.     In  MCI
   Telecommunications Corp., GSBCA 10450-P,  90-2 BCA   22,735, 1990
   BPD   55, we found that respondent could add certain enhancements
   to the FTS2000 contract's toll-free "800" service pursuant to the
   "Changes" clause,  since  these  changes  improved  the  already-
   installed "800"  service.   These changes  included allowing  the
   contractor  (US Sprint) to  route calls differently  depending on
   the hour of the  day and to use a recorded  announcement to speed
   completion of calls.   Such changes did not  add another type  of
   toll-free  service to the  contract, but rather  improved the one
   already offered and  installed.  Second, it was  impossible as an
   engineering matter  for  another  carrier  to  provide  different
   routing  of "800"  calls,  or  recordings to  aid  in "800"  call
   completion,  without  providing  the "800"  service  itself.   In
   contrast, in  the instant case,  all parties  agree that  another
   carrier  could provide  T-3 lines  without  providing any  of the
   other dedicated services.  
 
        Finally,   the  attorneys   and   witnesses  appearing   for
   intervenor MCI at this hearing  admitted that the change at issue
   in the  "enhanced 800" case cost  only $2 million, which  was the
   carrier's  incremental  increase  in  cost  over   providing  the
   toll-free service  without the  enhancements. Transcript  at 378.
   In contrast, AT&T, while contending that supplying T-3 service is
   nothing  more than  a  change  within the  ambit  of the  Changes
   clause,  nonetheless sought and obtained pricing of that "change"
   on the basis of its  commercial tariffs rather than any increased
   cost inherent  in providing T-3  service in lieu of  T-1 service.
   In fact, both the respondent and AT&T have never considered, much
   less determined, the cost (in   contrast to the price) difference
   to AT&T  in providing  T-3 rather  than T-1  service.  Since  the
   witnesses testified that the local exchange companies, as well as
   the long-distance carriers, had installed fiber-optic cable right
   into  many new  commercial and  federal  buildings, and  that the
   local  companies likewise were "multiplexing" slower calls into a
   faster stream, one might surmise that the cost increase is rather
   small to nonexistent.  
   The Competition in Contracting Act
 
 
        Under the Competition  in Contracting Act (CICA),  41 U.S.C.
     253(a)(1)(A)  (1988), the  Government  must conduct  its procu-
   rements  using "full and open  competition," subject only to very
   limited  exceptions.   Respondent's witnesses admitted  that they
   did not  include T-3 service  in the 1988 FTS2000  contracts, nor
   bargain for this service between 1987-88, or even ask offerors to
   price it as  an optional feature.  In  contrast, respondent asked
   for quotations for  the not-commercially available ISDN,  and all
   agree  that  respondent  has never,  between  1988  through 1992,
   subjected the T-3 requirement to competition.  
 
        The evidence  clearly establishes  that the  market for  T-3
   service is exceedingly  competitive.  At least  four major inter-
   exchange  carriers  participate  in this  market:    WilTel, MCI,
   Sprint, and AT&T.  If the Government's requirements for dedicated
   T-3   service  were  opened   to  competition,  the   prices  and
   performance would  likely reflect  the highly  competitive market
   for dedicated T-3 service, and be  substantially lower than those
   proposed by AT&T in sole-source negotiations with the respondent.
 
        Although the Appropriations  Act of 1992,  Pub. L. No.  102-
   141, Section 622, 105 Stat. 834 (1991), requires federal agencies
   to use  the FTS2000, or seek  an exception to it,  when obtaining
   the services  covered by that  contract, if the services  are not
   covered by  that contract  such services may  not be  procured by
   simply modifying the FTS2000 contract  to include them.  The CICA
   does not permit the  FTS2000 contractors and respondent  to avoid
   the competitive process in procuring new services not  covered by
   the    contract     for    the    sake    of     "economies    of
   scale[foot #] 7,"     or    even     to    improve     Government
   efficiency   by   speeding   agencies'   access   to   technology
   breakthroughs,   although   both  are   goals   of  the   FTS2000
   procurement.  
        Nor   can  the  respondent   now  argue  that   the  Service
   Improvement Clause H-16 itself exempts the agency, and AT&T, from
   compliance  with  the  CICA.   The  respondent's  own contracting
   officer admitted  that the  Service Improvements  clause was  not
   intended  to confer any broader authority to modify the contract,
   but to "implement" changes related to improved technology consis-
   tent with the  Changes clause.   Transcript at  369-70.  We  have
   grave  doubts  that any  such  authority  can  exist.   Any  such
   envisioned expansion of  the Changes clause would  eviscerate the
   statutes governing competitive procurement. 
 
        Even  a close  reading of  the  Service Improvements  Clause
   H-16, which respondent now argues allows it to add T-3 service by
   mere  modification, favors the protester.  This clause encourages
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 7     We  very much doubt that there is any economy
   "of  scale" or otherwise  in this non-competitive  procurement by
   contract modification.
 
                   ----------- FOOTNOTE ENDS -----------
 
 
   contractors to offer  improvements to existing services  only, as
   follows:  
 
 
        After contract  award, the Government  may solicit, and
        the Contractor is encouraged  to propose independently,
        improvements  to  the  services,  features,  or   other
        requirements of the contract.  
 
   Plainly,  the word  "improvements" entails  the  notion of  doing
   something  to the  service  which results  in  better quality  or
   greater value.   In addition,  this clause does not  suggest that
   the contractor can propose new or additional services.   Clearly,
   to  come within  the plain  meaning of  this provision,  a change
   would     have    to     constitute    an     enhancing[foot #] 8
   modification of  the services  already bargained  for during  the
   1987-88 negotiations,  i.e.,  an improvement  limited to  analog,
   digital, and T-1 in the Dedicated Transmission Services' group.  
 
        Accordingly,   we  apply  the  plain  meaning  of  the  word
   "improvements" used in  H-16.  This  plain meaning is  thoroughly
   consistent with  the other provisions  of the  contract, such  as
   Section C.1.3.f of the solicitation, which said that one contract
   goal  was "ensuring continued  improvements in FTS2000 services."
   This language is very close to that of H-16 itself, indicating an
   interest in future  enhancements to existing services.   However,
   even in this fairly lengthy and apparently comprehensive list  of
   objectives,   no  mention   is  made   of   adding  new   FTS2000
   services.[foot #] 9
 
        Even more damaging to respondent's argument is the fact that
   its  own  regulations,  published   as  the  Federal  Information
   Resource  Management  Regulations  (FIRMR),  41  CFR  201 (1990),
   present a  more limited  view of how  it, and  the two  carriers,
   would adapt  the FTS2000 contract  over its 10-year life  than it
   makes before the Board today.  There, respondent did not say that
   it would add  services to the FTS2000 over time,  but rather that
   it would offer user agencies enhancements of:  
 
        existing  services  and  add  features  to  the FTS2000
        network to maintain technologically current services to
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 8     With  the  exception of  modifications  which
   reduce  services, any  modification would  be  enhancing, or  the
   ______
   government would have no reason to enter into the modification.
 
        [foot #] 9     The  objectives  also  refer  to procuring  a
   "comprehensive set of telecommunications services."  AT&T Protest
   File  Supplement, Exhibit  1 at  C-15-1.   However,  there is  no
   indication that the  "comprehensive set" is  other than the  very
   long and comprehensive list of  services actually procured at the
   time.    Obviously, FTS2000  did  not,  could  not, and  was  not
   intended to include every telecommunications service that existed
   at that time or would later come into existence.  
 
                   ----------- FOOTNOTE ENDS -----------
 
 
 
        user agencies.   GSA will make service  improvements in
        accordance with  agencies' needs,  contract provisions,
        governing regulations and statutes.
 
   FIRMR 201-24.101-1(c).  As we found, a "feature" is a subset of a
   "service," defined specifically as "either an integral capability
   or an additional  enhancement to a service."   We find  the FIRMR
   indeed  permits   addition  of  features  to  the  bargained-for,
   enumerated  services,  but  does not  authorize  the  addition of
   services that respondent and AT&T are attempting here.  
 
   T-3  is an  Independent  Service, not  a  Service Enhancement  or
   "Feature" 
 
        The evidence is uncontroverted that dedicated T-3 service is
   one that  is "greater  than the  sum" of  even a  large group  of
   analog, digital, or T-1 lines.  First, T-3 transmission can occur
   only over  fiber-optic lines,  while the  other three  enumerated
   services  can  operate   quite  adequately  in  the   old  copper
   environment.  Second, a  T-3 provider must replace  T-1 equipment
   to add the service, rather than merely increase the number of T-1
   lines tied to an agency.  
 
        Third,  unlike the  "enhanced  800"  service situation,  the
   current  FTS2000 contractors  can  continue providing  the  three
   other  dedicated services  without interruption,  whether or  not
   they,  or  protester,  or MCI,  ultimately  provide  T-3  after a
   competitive  procurement.   The  addition of  T-3  results in  no
   change whatsoever to  T1 or  other dedicated  services under  the
   contract.  This  is no different than what occurs  in the commer-
   cial market, where T-1, T-3, and other services are sold indepen-
   dently to whomever wants them.[foot #] 10  
 
        Fourth,  adding T-3  service will  permit  user agencies  to
   expand  dramatically the  applications  used  with  DTS.    These
   include transmissions in support of supercomputers,  high-quality
   video, and  high-resolution  imaging (e.g.,  weather mapping  and
   medical imaging) signals.   The evidence shows that  T-3 services
   acquired  under the  modification  will be  used  to support  new
   applications  not possible  with  T-1, especially  supercomputing
   applications.  As a mere  lagniappe, T-3 also will allow agencies
   to aggregate slower voice and data lines into a single high-speed
   line.
 
        Fifth, carriers will use  different equipment when supplying
   T-3 service, and user agencies  will need to acquire new customer
 
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 10    The  fact  that  such  separate services  are
   sometimes  grouped  for ease  of  reference  under a  heading  or
   category such  as "Dedicated Transmission Service"  or "T-carrier
   family of services"  does not make them any  the less independent
   of each other.  
 
                   ----------- FOOTNOTE ENDS -----------
 
 
   premise equipment, including on-site multiplexers, to support the
   new applications available with T-3 service.  
 
 
        Sixth, we cannot  forget the fact that  respondent estimated
   the cost of  the modification to  be roughly $99  million.   This
   represents the cost of T-3  service to twenty-one paired sites at
   thirty locations.  Future additions of T-3 could raise the figure
   substantially.   In  absolute terms,  this  figure represents  an
   enormous increase in contract value.   Obviously, the cost of T-3
   lines is  large enough  to make separate  procurement, even  on a
   site-by-site basis, very feasible.  
     
        Finally,   AT&T,  in   its  own   T-3   proposal,  with   an
   understandable advertising enthusiasm, describes T-3  as a fourth
   "independent" and "separate" service:
 
        Dedicated transmission service  (DTS) consists of  four
        independent services:  dedicated analog service,  dedi-
        cated digital service, dedicated  T1 service, and dedi-
        cated T45 service.   Each of  these four services  will
        provide point-to-point, dedicated service. . . .
 
        All  four services  will be  provided  through the  DTS
        architecture . . . .
 
        DTS  comprises  four  separate   services:    dedicated
        analog, dedicated digital, dedicated T1, and  dedicated
        T45.  Because  each is designed to  provide a different
        type of service, this section presents both an overview
        of DTS architecture and an architecture description for
        each of the four services . . . .
 
   Protest File, Exhibit 5 at 5.1.7-1.
 
        Respondent accepted this  proposal.   The quoted  admissions
   concerning the  nature of T-3  are thus  set out in  the contract
   itself.   These contract  provisions, which go  into considerable
   detail  about the  nature of all  services in  this case,  do not
   claim that  T-3 is an  enhancement of any other  dedicated trans-
   mission service.   We thus agree with  AT&T itself that T-3  is a
   service separate from T1.   Because T-3 service constitutes a new
   and  independent service--not an enhancement to an existing one--
   it is not a "service improvement" covered by clause H-16.
 
   Applying "Changes" Clause Principles
 
        Here, by everyone's admission, respondent did not bargain to
   procure T-3 service when it was negotiating the  FTS2000 contract
   between 1987  and 1988.   It is  a technically  different service
   limited to a  small, specialized number of applications that AT&T
   now  proposes  to price  at  market  rates,  rather than  at  its
   incremental  higher  cost  over  T-1 service.    We  finally must
   determine whether the Changes Clause would permit the addition of
   this service.
 
        We conclude that it does  not after noting that respondent--
   in considering whether to purchase the not-commercially available
   ISDN--stated in  the solicitation that  it intended  to buy  this
   service under FTS2000, and included this clause:  
 
        The Government believes that ISDN will reduce costs and
        enhance the quality  of communications  services.   The
        Contractor's  services shall  migrate to  ISDN  to some
        locations at some time during  the ten year life of the
        Contract.   Offerors shall propose a plan for migration
        of services  to ISDN  in conformity  with existing  and
        evolving  international  and   national  standards  and
        recommendations.
 
   AT&T  Exhibit  1   at  C-18.    In  contrast,   T-3  service  was
   commercially available in 1988, but respondent did  not leave the
   door open to buy it.  
 
        We conclude that T-3 service is a new service whose procure-
   ment   must   be    competed   by   the    respondent.[foot #] 11
   We  cannot conclude  that  the  protester was  on  notice of  the
   issuance  of the  modification  earlier  than  claimed  when  the
   procurement was not properly synopsized.
 
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 11    This ruling was requested by the protester.
 
                   ----------- FOOTNOTE ENDS -----------
 
 
 
                                Decision
 
        The protest is GRANTED.
 
    
 
 
                                      _________________________
                                      JAMES W. HENDLEY
                                      Board Judge
 
 
   We concur:
   _________________________          _________________________ 
   EDWIN B. NEILL                     ROBERT W. PARKER
   Board Judge                        Board Judge