____________________________
 
                       DENIED: September 25, 1992
                      ____________________________
 
                             GSBCA 11938-P
 
                   CORPORATE SYSTEMS RESOURCES, INC.,
 
                                        Protester, 
 
                                   v.
 
                      TENNESSEE VALLEY AUTHORITY,
 
                                        Respondent.
 
        Paralee  White and Donn Milton of Cohen & White, Washington,
   DC, counsel for Protester.
 
        Peter  K.  Shea,  William  L. Osteen,  Edwin  W.  Small, and
   Michael L.  Wills, Office  of General  Counsel, Tennessee  Valley
   Authority, Knoxville, TN, counsel for Respondent.
 
   Before Board Judges DEVINE, HYATT, and VERGILIO.
 
   VERGILIO, Board Judge.
 
        On July 23,  1992, Corporate Systems Resources,  Inc. (CSR),
   filed a protest  with this Board.  The  respondent, the Tennessee
   Valley Authority (TVA), had selected protester as a candidate for
   a   sole-source   8(a)   contract   with   the   Small   Business
   Administration  (SBA)  to  satisfy  certain  requirements of  the
   agency.  After receiving protester's proposal, the agency decided
   against  an award  involving  protester and  sought  to obtain  a
   proposal from a different company for a sole-source 8(a) award.
 
        Protester  contends  that the  agency improperly  refused to
   negotiate with it concerning the proposed subcontract, and failed
   to give its proposal the fair consideration required by statute.
 
        The agency concluded that protester failed to add sufficient
   value to the contract to justify negotiations with, or pursuit of
   an  award to, protester.   This conclusion  served as  one of two
   bases upon  which the  agency relies in  support of  its actions.
   Protester  has  not   proven  that  the  agency   conclusion  was
   arbitrary, capricious, or  otherwise unreasonable, or that  it in
   any  way violated  statute,  regulation,  or  the  conditions  of
   procurement authority.  Therefore, the Board denies the protest.
 
                            Findings of Fact
 
        1.   The   agency  required   maintenance  of   Optigraphics
   Corporation equipment  already in place  and required  additional
   optical scanning  hardware, software,  and services.   By  letter
   dated February 27, 1992, to the SBA, protester requested that the
   agency  requirement  be  set  aside as  an  8(a)  procurement for
   protester.  Protest File, Exhibit 52.
 
        2.   By letter dated March 16, 1992, the agency informed the
   SBA that it desired  to enter into a contract with  the SBA under
   the 8(a) program.  The agency described the  proposed procurement
   as an IQT contract in the estimated amount of $4.5 million.   The
   agency   requested  that  the  SBA  consider  protester  for  the
   subcontract.   It proposed  to negotiate directly  with protester
   and to  keep  the SBA  informed as  the negotiations  progressed.
   Protest File, Exhibit 2.
 
        3.   At  the time the  agency was considering  setting aside
   the procurement and after  the determination was made  to propose
   protester as the subcontractor, some individuals at the agency (a
   project engineer, in particular) expressed concern with utilizing
   protester to satisfy the agency requirement.  E.g., Protest File,
   Exhibit 5  (memorandum dated  Apr. 6, 1992)  (if not  possible to
   compete  the requirement, "could  we change from  [protester] and
   negotiate a contract with  Sylvest Management Systems?"), Exhibit
   8 (memorandum  dated May 4,  1992) ("I understand that  there are
   some  concerns  expressed  by [the  project  engineer]  about the
   capabilities of [protester]  who does not  currently have an  OEM
   agreement with Optigraphics"); Transcript at 87-89, 135.
 
        4.   By memorandum dated  April 16, 1992, to a specialist of
   the agency's  Office of Small Disadvantaged  Business Utilization
   (OSDBU) the  agency project  engineer  memorialized a  discussion
   with that individual:
 
             Subsequent to the  meeting with the President
             of  CSR I  had a  meeting with  Optigraphics'
             Vice-president  of  Sales  and  Marketing  to
             discuss  Optigraphics'   position  on   doing
             business  with  8(A)  firms.    I  felt  this
             meeting  was   necessary  since  TVA   has  a
             substantial   investment   in   its  scanning
             systems supplied by Optigraphics.
 
             Optigraphics will not support an award to CSR
             for  the  procurement,   maintenance,  and/or
             installation of existing/new  hardware.  This
             decision   was  based   on   review  of   the
             documentation   of   CSR's   experience   and
             products  list.   Optigraphics  will  however
             support  an   award  to   Sylvest  Management
             Systems.    Sylvest   and  Optigraphics  have
 
             recently had successful partnerships and both
             companies would entertain further ventures.
 
             Based  on the  aforementioned meeting,  on my
             intention    to    protect    TVA's   current
             investment, and  to support  TVA's commitment
             to participate in the 8(A) program, I request
             that you cancel the  CSR offering letter  and
             issue  an offering letter  for Sylvest to the
             Small Business Administration.
 
   Protest File, Exhibit 10.   The SBA refused to withdraw protester
   as  the  proposed  awardee or  to  switch  to Sylvest.    The SBA
   instructed  the  agency  to request  a  proposal  from protester.
   Transcript at 90, 153.
 
        5.   A   letter  dated  April  22,  from  an  individual  at
   Optigraphics  to   the  agency  project   engineer  states   that
   Optigraphics "would not be interested in supporting any 8(a) firm
   other than Sylvest.   . . .  We would not feel comfortable with a
   project  of this  cost and  complexity  relying on  a firm  whose
   expertise is in other areas."  Protest File, Exhibit 11.
 
        6.   Under  cover letter  dated  May  6,  the  agency  OSDBU
   specialist provided protester with the solicitation.  In addition
   to  instructing protester to complete and return the solicitation
   for the  agency to evaluate, the letter advised protester: "Also,
   we  kindly request  that  CSR  send us  a  letter addressed  from
   Optigraphics Corporation advising  that they will support  CSR on
   the mainframe should CSR be  awarded this TVA contract."  Protest
   File, Exhibit 13.   The solicitation provides that  "each initial
   offer  should be  submitted on  the most  favorable terms  from a
   price and technical  standpoint."  Id., Exhibit  25, Solicitation
   at 5.
 
        7.   In   a  letter   to  the   agency  dated  May   13,  an
   Optigraphics'  Vice President reveals his concerns with having to
   deal with protester:
 
             Furthermore, the  subcontracting of  services
             through Optigraphics would incur us with more
             expense  administrating  the   contract  than
             would  have occurred if we had dealt with TVA
             direct.     This  approach   is  particularly
             unpalatable,  in view of the fact that CSR is
             expecting  us   to  discount   our  products,
             thereby,   involving   us  in   more   effort
             administrating the contract for less revenue.
 
             In  light  of the  above,  Optigraphics would
             much  rather deal with an 8(a) that can offer
             value  added services,  and thereby  generate
             their revenue without  requiring Optigraphics
             to sacrifice its margins  in order to provide
 
             them with what appears to me as an artificial
             method of generating revenue.
 
             We will  continue to deal  with CSR providing
             they can furnish us  with specific details of
             their award.
 
   Protest File, Exhibit 40.
 
        8.   Optigraphics  continued to  deal  with  protester.   By
   letter dated May 14, Optigraphics informed protester:
 
             [P]lease find  enclosed Optigraphics  product
             brochures.       We   have    more   detailed
             information, but did not want to release same
             until such time  as our two companies  have a
             business relationship established.
 
             I look  forward to  hearing from  you in  the
             near  future.   In  the  meantime, please  be
             advised that Corporate  Systems Resource Inc.
             is   not   empowered  to   bid   Optigraphics
             equipment, or represent to a third party that
             they  are   an  authorized   remarket[e]r  of
             Optigraphics equipment.
 
   Protest File, Exhibit  41 (emphasis added).  By  letter dated May
   21,   protester  notified  Optigraphics  that  it  had  used  the
   materials in preparing  a quotation  in support  of the  contract
   with the  Government.  The  letter concludes  with the  following
   sentence: "There  are many things  which we will need  to discuss
   prior to finalizing a business  arrangement, so if you would call
   me  as  soon as  you  have  had  an opportunity  to  examine  the
   materials, I would appreciate it."  Id., Exhibit 42.
 
        9.   Under cover  letter dated  June 2, protester  submitted
   the  system description  volume of  its proposal  to the  agency.
   Protest File, Exhibit  20.   The proposal  expressly states  that
   protester  offers the  Optigraphics line  of  image scanning  and
   manipulation components.   Id.,  at 1.   The information  in that
   volume  indicates that protester would provide almost exclusively
   the Optigraphics line of equipment.  Id.; Transcript at 93-94.
 
        10.  By  letter  dated  June  3,  Optigraphics informed  the
   agency  OSDBU specialist  that it  was working with  protester to
   enable  protester to  respond to  the solicitation.   The  letter
   highlighted a concern of  Optigraphics that it lacked  a business
   relationship  with protester.  It also  suggested that the agency
   "may want to verify with the selected 8-A that they do,  in fact,
   have the appropriate  authorization and agreement with  the other
   vendors they represent."  Protest File, Exhibit 21.
 
        11.  A  follow-up letter from Optigraphics, dated June 4, to
   the  agency   OSDBU  specialist  advised  "that   no  contractual
   relationship exists between CSR  and Optigraphics.   Accordingly,
   they  are  not  currently  empowered  to   remarket  Optigraphics
   products or  services and there is  no guarantee they will  be in
   the future."  Protest File, Exhibit 22.
 
 
        12.  The principal evaluator  of the first  submitted volume
   of protester's proposal was the  agency project engineer who  had
   expressed concerns regarding protester's  ability to perform  the
   contract.  Transcript at  148-49.  An internal agency  memorandum
   dated June 9, 1992, to  the agency OSDBU specialist, reveals that
   based  upon  a conversation  with the  project engineer,  the CSR
   proposal
 
             is not acceptable due to the following:
 
             1.   The proposal did not contain a letter of
             agreement stating a  contractual relationship
             between CSR and Optigraphics Corporation.
 
             2.   The  proposal  does  not  appear to  add
             value  to the contract  in that CSR  does not
             perform maintenance, integration  services or
             training on hardware.
 
             3.   There appears to  be a misrepresentation
             in  the  proposal  because  CSR  is  offering
             Optigraphics  equipment,  yet, they  have  no
             contractual relationship with Optigraphics.
 
   Protest  File, Exhibit 23.  These  conclusions were reached prior
   to receipt of  the entire CSR proposal, and  were reached without
   negotiations with protester.  Id.,  Exhibits 32, 51 at 16 (   22-
   24) and 1-3 (amended   12); Transcript at 117.  At the hearing on
   the merits, the contracting officer testified that had the agency
   received  a  letter from  Optigraphics  authorizing  protester to
   remarket Optigraphics' equipment and  services, from a  technical
   standpoint she would  have initiated discussions.   Transcript at
   119.
 
        13.  On June  11, apparently  after protester  had deposited
   the  rest  of its  proposal  with  Federal  Express,  the  agency
   informed protester that it had withdrawn the procurement from the
   8(a) program.  Protest File, Exhibit 36.[foot #] 1
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 1                      The   agency   relies   upon
   testimony  of  protester's  president, Transcript  at  48-49,  to
   assert that protester was aware of the agency's  determination on
   June 10,  such that  the agency protest  was untimely  submitted.
   Agency Post-hearing  Brief at  25-26.   An agency document  dated
   July 17, drafted prior to this protest, is more credible than the
   testimony of  protester's president.   Protest  File, Exhibit  36
   ("TVA notified  CSR on  June 11, 1992,  that the  procurement was
                                                      (continued...)
 
                   ----------- FOOTNOTE ENDS -----------
 
 
 
        14.  Under cover letter dated  June 12, protester  submitted
   the  three remaining  volumes  of  its  proposal  (standard  form
   contract;  response to system requirements; and cost proposal) to
   the agency.
   Protest File,  Exhibit 25.    As of  June 12,  when the  complete
   proposal  was due,  protester lacked  the  authority to  remarket
   Optigraphics products or services.   Id., Exhibits 47, 54  (  4).
   Protester had provided the agency with no assurance that it could
   deliver  the offered Optigraphics goods and services.  Transcript
   at  56-58.     However,   throughout  the   period  of   proposal
   preparation,  Optigraphics  provided protester  with  information
   (including diskettes  and pages  of company  confidential product
   descriptions and  prices) to  be used in  the formulation  of the
   proposal  volumes.    Id.,  Exhibits  43-46;  Transcript  at  66-
   69.[foot #] 2
 
        15.  For  each   of  the  fifty-seven  priced   line  items,
   protester's proposal  specifies  an  Optigraphics  model  number.
   Protest File,  Exhibit 25 (Cost Proposal  at 1).  For  these line
   items, the record  permits the Board to compare  the GSA schedule
   prices of Optigraphics  (or list price, if schedule  price is not
                                                                    
                   ----------- FOOTNOTE BEGINS ---------
 
        [foot #] 1 (...continued)
   being withdrawn  from CSR.").   Moreover, at  no time  before its
   post-hearing  brief  has  the agency  asserted  that  it notified
   protester prior to  June 11 of  the adverse actions, nor  did any
   agency  official testify that notification occurred prior to June
   11.
 
 
        [foot #] 2                      A  letter  from Optigraphics
   to protester dated June 12 concludes with the following:
 
             [W]hen  TVA  asked about  the  status  of our
             relationship  with  CSR,   Optigraphics  felt
             obliged to  tell them  what we  told you  and
             what  CSR knows  is still  the case,  namely,
             that CSR  and Optigraphics  have no  existing
             contractual relationship  and the CSR  is not
             empowered   to  remarket   our  products   or
             services.  (Your  letter of June 11  confirms
             that no contractual relationship exists.)
 
             .  .   .  We  do  not  believe  it  would  be
             productive to  have further  discussions with
             CSR at this time.
 
   Protest File, Exhibit 47.  A letter dated August 14, from counsel
   for  Optigraphics  to  counsel  for  protester  states:  "If  CSR
   prevails on those issues [before  the Board] and is reinstated as
   the 8(a) supplier for the TVA project, Optigraphics will consider
   the negotiation issue at  that time.  At this time,  however, the
   issue is moot . . . ."  Id., Exhibit 57.
                           ___
 
                   ----------- FOOTNOTE ENDS -----------
 
 
   indicated)  with the proposed  prices submitted by  protester for
   forty-nine line items (1-31, 33, 36-38, 40-41, 43-52, 55-56) each
   of which has a unit price  and a monthly maintenance price.   For
   only eight of these line  items does the protester propose prices
   below  the Optigraphics'  GSA schedule  price.   Regarding  those
   eight  line items,  as protester  explained  during the  hearing,
   although   the   four-volume    proposal   specifies   particular
   Optigraphics'  model   numbers  for  each  line  item,  protester
   intended  actually   to  provide   other  suppliers'   equipment.
   Transcript at 73 ("even though  we used Optigraphics' part number
   as a reference, we were furnishing part of the underlying turnkey
   workstation").  For the remaining forty-one line items, protester
   proposed  prices approximately ten  percent in excess  of the GSA
   schedule  (or  list) price.    Protest Files,  Exhibits  25 (Cost
   Proposal), 39, 45.
 
 
        16.  A review of  protester's entire proposal does  not make
   apparent what value protester would  add to the procurement.  For
   example, protester  acknowledges that  the solicitation  does not
   require  program management; however, protester proposed labor in
   this area because it felt that  it "had to have somebody who  was
   responsible for making everything happen."  Transcript at 77.  At
   the hearing, the  project engineer explained his  conclusion that
   protester failed to add sufficient value to justify negotiations:
 
             It seemed to  me that it  was, instead of  an
             enhancement or value add, or anything, it was
             a  value  subtract to  me because  the normal
             course  of business  had been,  for  the past
             three  years,   TVA  contacted   Optigraphics
             directly, and talked  with specific technical
             people  in specific  areas,  and here  was  a
             situation where I  was going to go  through a
             third party.  I didn't find that palatable.
 
   Transcript at 93-94, 100 ("I do  know that we didn't request that
   service in the RFP.  The only thing we asked for in the RFP was a
   point of  contact and,  in  my mind,  that meant  similar to  the
   existing relationship that we have.").
 
        17.  Without  further  support  in  the record,  protester's
   reliance  upon  its own  calculations  of  the "value  added"  by
   protester, Protest File, Exhibit 53,  is misleading.  First,  the
   calculations  are made  considering fewer than  half of  the line
   items, and utilize  only a quantity of one for each of those line
   items.   Thus, the  calculations do  not necessarily  reflect the
   true,  expected   purchasing  by   the  agency.     Second,   the
   calculations treat as a "value added" the approximate ten percent
   charge  levied by  protester to  Optigraphics'  GSA schedule  (or
   list) prices.  That extra charge may  well be the antithesis of a
   value   added.    Third,   protester  has  not   discredited  the
   conclusions of  the project  engineer, finding  16, that  certain
   personnel  support  charges do  not  reflect added  value  to the
   procurement.
 
        18.  Protester filed a  protest with the agency  on June 25,
   objecting to the agency's refusal to negotiate with protester and
   its determination not  to pursue an award to  protester.  Protest
   File, Exhibit 29.  The agency denied the  protest by letter dated
   July 6, which  protester received on  July 9.  Id.,  Exhibits 34,
   39.
 
        19.  Both before and  after the protest  was filed with  the
   agency, throughout mid-June and  early July, the agency was  once
   again exploring  with the SBA  the possibility of  satisfying the
   protested requirement  utilizing a competitive  procurement or by
   switching to Sylvest under a sole-source 8(a) set-aside.  Protest
   File, Exhibits 28, 30-31,  49; Transcript at 122-23, 144, 146.  A
   letter dated June 18, from the agency OSDBU specialist to the SBA
   states:
 
             The subject proposal was  initially set aside
             for 8(a) procurement recommending [protester]
             as the subcontractor.
 
             After review of [protester's] proposal, it is
             apparent they  will be providing little or no
             add-value to this requirement,  also the firm
             did not  provide us  with the  assurance that
             they   are    authorized   by    Optigraphics
             Corporation  to  remarket its  products.   As
             indicated  by   the  enclosed   letters  from
             Optigraphics Corporation, we believe there is
             little use  in continuing to pursue this 8(a)
             requirement  since CSR  is  not empowered  to
             market  Optigraphics  products  or  services.
             Accordingly, we request CSR be withdrawn from
             further consideration and  Sylvest Management
             Systems Corporation, Greenbelt,  Maryland, be
             considered  for  this 8(a)  procurement.   We
             believe Sylvest has the capability to fulfill
             this requirement.
 
             Please contact our office as soon as possible
             regarding this  request, if  you concur.   We
             propose  to negotiate  directly with  Sylvest
             and   keep  you   informed  as   negotiations
             progress.
 
   Protest File, Exhibit 28.
 
        20.  By letter dated  July 13, the  SBA informed the  agency
   OSDBU  specialist that  the SBA  had  preliminarily accepted  the
   offer into the 8(a) program.  Protest File, Exhibit 35.  Further,
 
             Your   offering    letter   and    supporting
             documentation  have  been  forwarded  to  the
             appropriate SBA  field office  for compliance
             review  and   final  acceptance,   pending  a
 
             determination  of suitability,  on behalf  of
             the nominated firm [i.e., Sylvest].   You may
             commence contract negotiations only after you
             are  notified  of  final acceptance  of  this
             offer by the cognizant SBA field office.
 
   Protest File, Exhibit 35.  The letter does not take any exception
   to   the  agency's  determination  to  proceed  no  further  with
   protester  in an  attempt to make  an award,  Finding 19.   At no
   point  has  SBA   certified  that  protester  is   competent  and
   responsible to perform the contract at issue.
 
        21.  On  July  23,  protester filed  its  protest  with this
   Board.  Protest File, Exhibit 38.
 
                               Discussion
 
        In  its protest,  protester  alleges  that  by  refusing  to
   negotiate  with protester, the  agency exceeded the  authority it
   had received from the SBA  pursuant to regulation, 48 CFR 19.808-
   1(b).   Further, it asserts that  by refusing to negotiate and to
   provide  protester  a  reasonable   opportunity  to  revise   its
   proposal,  the   agency  failed   to  give   the  proposal   fair
   consideration,  thereby violating  statute,  15 U.S.C.    631(a),
   (f)(2)  (Supp. III 1991).   Corporate Systems  Resources, Inc. v.
   Tennessee Valley Authority, GSBCA 11938-P, 1992 BPD   218, at 3-4
   (Aug. 20, 1992) (motion for summary relief denied).
 
        Protester  has focused its  assertions now to  maintain that
   the agency's  rejection  of  its  proposal is  improper  for  two
   reasons.     First,  the  determination  that  the  proposal  was
   incapable  of being made acceptable  was made prematurely and was
   incorrect.   Second,  the determination  that  protester was  not
   adding  value to the  procurement was made  without reviewing the
   entire proposal and  without permitting protester to  demonstrate
   the value  that it  would be  adding.   Protester's  Post-hearing
   Brief  at  14.   Moreover,  in  its  post-hearing brief,  at  14,
   protester asserts:  "Given that  TVA had  predetermined that  CSR
   could not win  this award, CSR was thus asked to submit a useless
   proposal.  Therefore, if CSR is eliminated from this procurement,
   CSR  is entitled  to both  its proposal  costs and  its costs  of
   pursuing this protest."
 
        Although  protester  asserts  that   the  agency  improperly
   determined  that protester's proposal was incapable of being made
   acceptable, protester  relies upon a  standard without  providing
   specific statutory or  regulatory support.  The  agency proceeded
   with the procurement as a sole-source, 8(a) set-aside.  15 U.S.C.
     637 (Supp. III 1991).  The agency did not utilize techniques of
   competitively negotiated  procurements, which  dictate procedures
   applicable  to  a  competitive range  determination.    41 U.S.C.
      253,  253a,  253b  (1988);  48   CFR  Part  15  (1991).    The
   regulations applicable  to the given  procurement action  suggest
   that an agency may dispense with negotiations and drop an offeror
   even if a proposal is capable of being made acceptable:
 
 
             If . .  . other information available  to the
             contracting officer raises  substantial doubt
             as  to  the firm's  ability  to perform,  the
             contracting officer  should refer  the matter
             to the  SBA for its consideration in deciding
             whether  SBA   should  certify  that   it  is
             competent and  responsible to perform.   This
             is  not   a  referral   for  Certificate   of
             Competency consideration under  Subpart 19.6.
             Within  15 working days of the receipt of the
             referral  or a longer period agreed to by the
             SBA  and the  contracting  activity, the  SBA
             Assistant Regional Administrator for Minority
             Small   Business   and    Capital   Ownership
             Development  in  the  regional  office  which
             services  the  8(a)   firm  will  advise  the
             contracting   officer   as   to   the   SBA's
             willingness  to  certify  its  competency  to
             perform the  contract using the  8(a) concern
             in  question  as  its   subcontractor.    The
             contracting  officer shall  proceed with  the
             acquisition and award the contract to another
             appropriately  selected 8(a)  offeror if  the
             SBA has  not certified its  competency within
             15  working   days  (or  a   longer  mutually
             agreeable period).
 
   48 CFR 19.809  (1991).  Without any  support in the record  for a
   different standard applicable to conducting (or not) negotiations
   under an  8(a) sole-source  procurement, the  Board utilizes  the
   standard of  "fair consideration"  in  reviewing agency  actions.
   15 U.S.C.    631 (Supp.  III  1991);  KOH  Systems,  Inc.,  GSBCA
   9388-P, 88-2 BCA   20,664, 1988 BPD   38.
 
        Here, the agency based its determination not to negotiate or
   pursue  an award  with  protester  on  two  independent  grounds.
   First,   protester  did  not  provide  a  letter  establishing  a
   contractual   relationship  between   itself  and   Optigraphics.
   Ancillary  to this is the possible misrepresentation by protester
   of its relationship with Optigraphics.  Second, the proposal does
   not add  value to the contract.   It is only the  second of these
   grounds upon which the Board need focus.
 
        The  agency   decided  not   to  pursue   negotiations  with
   protester, in part,  because the agency concluded  that protester
   failed to add value to the contract.  Finding 12.  Protester  has
   not  demonstrated that it would in fact add value to the contract
   or that the  agency's conclusions and actions  were unreasonable.
   To the contrary, the record supports the conclusion of the agency
   that protester  had not proposed  to add sufficient value  to the
   contract to justify further agency involvement with protester.
 
        In  particular,  protester   specified  Optigraphics'  model
   numbers for  each of  the priced line  items at  prices generally
   higher than those already available  to the agency.  Findings 15,
   17.  In terms of the services portion  of the proposal, protester
   has  not revealed  why it  was improper  or unreasonable  for the
   agency to conclude  that protester's proposal  added insufficient
   value.  Finding 16. 
 
        Protester had the  opportunity to submit its  most favorable
   offer,  Finding 6; the  agency concluded that  insufficient value
   would  be added  by protester  to  justify further  action.   The
   agency  exercised its  discretion in  eliminating protester  from
   further consideration in  the procurement.  Protester  has failed
   to demonstrate  with the  entirety of its  proposal and  with the
   record  as  a  whole  how  the  agency  actions  and  conclusions
   constituted  other  than  fair  consideration,  or  violated  any
   statute or regulation.
 
        The   protest  is  premised  on  the  assumption  that  once
   protester  was  accepted into  the  8(a) program  to  satisfy the
   particular agency requirement, the agency was obligated to engage
   in negotiations or  otherwise take actions which would  result in
   protester  obtaining a contract.   Protester has  not established
   what  prohibited the agency from reasonably concluding that award
   to this offeror,  in essence, would not be in  the best interests
   of  the  Government  and  abandoning  protester  as  a  potential
   awardee.   The  contracting officer  exercised  discretion.   The
   facts  do not  compel  a  contrary action,  even  if a  different
   contracting officer  may have pursued negotiations with protester
   prior  to making a determination regarding protester's ability to
   add value to the contract.
 
        Given this  conclusion regarding  the reasonableness  of the
   agency's  actions and  the  conclusions  regarding  the  lack  of
   sufficient value added, the Board need not determine whether  the
   lack   of  authorization  from  Optigraphics  could  serve  as  a
   reasonable basis to justify the agency's conclusions and actions.
 
        Finally,  protester has  failed  to demonstrate  any  agency
   predetermination  not  to  effectuate   an  award  to  protester.
   Despite concerns  of  certain  agency  personnel  throughout  the
   procurement process,  no actions  improperly precluded  protester
   from  submitting  an  offer which  would  have  compelled further
   consideration by the agency and/or the SBA.
 
                                Decision
 
        Protester has  failed to meet  its burden of  proof; namely,
   protester  has  not  demonstrated that  the  agency  violated any
   statute,  regulation  or  condition of  procurement  authority by
   determining not to proceed with negotiations and not to pursue an
   award involving  protester.   Accordingly, the  Board denies  the
   protest.    The  previously  entered  suspension  of  procurement
   authority lapses by its terms.  Corporate Systems Resources, Inc.
   v.  Tennessee Valley  Authority, GSBCA  11938-P,  1992 BPD    206
   (Aug. 10, 1992).
 
                                        ________________________
                                        JOSEPH A. VERGILIO
                                        Board Judge
   I concur:
   _________________________
   CATHERINE B. HYATT
   Board Judge
 
   DEVINE, Board Judge, dissenting.
 
 
        I  disagree with  the  result reached  by  the majority  and
   therefore dissent.   Once  protester was accepted  into the  8(a)
   contracting  program, it was the  duty of the contracting officer
   to enter into  negotiations with it with respect  to the agency's
   ADPE  requirements.   The contracting  officer  began the  proper
   process but went astray when she required protester to  establish
   that it had a contractual arrangement with Optigraphics, the firm
   that   had   supplied  the   optical  scanning   equipment  whose
   maintenance and support  was the subject  matter of the  proposed
   contract,  and  the  firm  that  was  presently  maintaining  and
   supporting  the equipment.   Optigraphics  was  also the  primary
   source  of replacement  equipment,  parts  and  expertise.    The
   majority asserts and relies on a second ground which it finds the
   contracting   officer   relied  on   to   justify  breaking   off
   negotiations.  This was the idea that protester's proposal failed
   "to add value to the contract."  This expression apparently means
   that someone  else can do the job cheaper.  In this case that was
   Optigraphics,  the  manufacturer  of   the  equipment  at  issue.
   Optigraphics  controlled  the  cost  of  replacement   equipment,
   replacement parts, and the price  of its expertise.  It therefore
   could set a floor on many of the prices that protester had to use
   in its proposal.  It could  also defeat award to a given  offeror
   by allowing better prices to a competitor such as Sylvest.
 
        When  the contracting officer required protester to supply a
   document that it was within  Optigraphic's power to withhold, she
   delivered protester into the hands of its most potent competitor.
 
        Optigraphics wanted to  continue the  relationship with  the
   agency that then  existed.  Although  it would ultimately  supply
   the  parts  and  replacement  equipment,  and  perhaps  even  the
   maintenance  services, for the existing scanners, even though the
   agency hired a middleman,  it much preferred to do the  whole job
   itself for  the simple reason  that it could  thereby make  a lot
   more money.  And  if it had to have a middleman it much preferred
   to have  a friendly  middleman which it  could control  and share
   profits with  under an  existing partnership  agreement, such  as
   Sylvest.
 
 
        This  is  why  Optigraphics  furnished  enough  confidential
   pricing and product  information to allow protester to  make up a
   proposal while at  the same time hedging on whether  it was going
   to authorize  protester to sell  its products.   Optigraphics was
   waiting  to see  which way  the  agency was  going to  jump.   It
   obviously wanted  the parts  supply and  maintenance business  no
   matter  who the  middleman  was  and did  not  therefore wish  to
   irritate either the agency or protester any more than it had to.
 
        As  it turned  out  the  contracting  officer's  refusal  to
   negotiate further with protester unless it could produce a letter
   of   authorization   from   Optigraphics,   played   right   into
   Optigraphic's
   hands,  and sank  protester's  chances for  good.   Without  that
   requirement Optigraphics would  have had  no say  in the  matter,
   negotiations  would have continued  and protester would  or would
   not have  been  awarded  the  contract  based  on  valid  reasons
   uninfluenced by its competitor Optigraphics.
 
        We  can speculate (as  the contracting officer  did) that an
   award to protester would be  a waste of time because Optigraphics
   might  withhold  its   equipment  and  expertise,   thus  causing
   protester to default.  We  can also speculate that once protester
   had the contract Optigraphics would have  come around one hundred
   percent  because it  had a  reputation to  uphold and  wanted its
   equipment handled and maintained properly.
 
        The point is that we will never know because the contracting
   officer cut off negotiations with  her improper request.  I would
   grant this  protest.  To  do otherwise is to  allow Optigraphics,
   instead of the contracting officer, to  decide who is to get this
   contract.
 
                                        _________________________
                                        DONALD W. DEVINE
                                        Board Judge