Comptroller General

United States Government Accountability Office

Washington, DC 20548 

of the United States

DOCUMENT FOR PUBLIC RELEASE

The decision issued on the date below was subject to a 

GAO Protective Order. This redacted version has been 

approved for public release. 

Decision 

Matter of: Qwest Government Services, Inc. 

File: B-404845 

Date: March 25, 2011 

Gregory A. Smith, Esq., David E. Fletcher, Esq., Christopher J. Kimball, Esq., and 

Charles L. Capito, Esq., Cooley LLP, for the protester. 

Beth Sturgess, Esq., Department of Homeland Security, for the agency. 

Jennifer D. Westfall-McGrail, Esq., and Edward Goldstein, Esq., Office of the General 

Counsel, GAO, participated in the preparation of the decision. 

DIGEST 

Costs for equipment and services furnished by the government in connection with 

performance of task order are not considered when determining whether value of 

the order exceeds the $10 million threshold to invoke task order protest jurisdiction. 

DECISION 

Qwest Government Services, Inc., of Arlington, Virginia, protests the terms of an 

unnumbered request for quotations issued by the Department of Homeland Security, 

U.S. Citizenship and Immigration Services (USCIS) for data center hosting services 

for USCIS’s Technology Engineering and Consolidation Center (TECC). The 

“hosting services” in question consist of providing a facility, power, network 

connections, and building security services for USCIS servers and other equipment. 

An order for the services will be issued to one of the three awardees under a General 

Services Administration indefinite-delivery/indefinite-quantity (IDIQ) contract for 

telecommunications services (the Networx Universal contract).1

 The protester 

objects to language in the RFQ providing for the addition of approximately $14 

million to the evaluated prices of contractors other than the incumbent service 

provider, Verizon, to take into account costs that the agency will incur if the services 

are provided in a new location. Qwest argues that this price evaluation approach is 

fundamentally unfair and is a de facto sole-source award to the incumbent. 

We dismiss the protest because we do not have jurisdiction to consider it. 

 

1

 The three contract holders are the protester, Verizon Business Systems, and AT&T. 
Page 2 B-404845 

Pursuant to 41 U.S.C. § 4106(f)(1) (2011), our Office has jurisdiction to entertain 

protests in connection with the issuance or proposed issuance of a task or delivery 

order only if the order has a value in excess of $10,000,000, or it is alleged that the 

order increases the scope, period, or maximum value of the contract under which 

the order is placed. Qwest has not argued that the order here exceeds the scope, 

period, or maximum value of the underlying contract; rather, it maintains that we 

have jurisdiction over its protest because the value of the order in question is [more 

than $10 million]. The agency argues in response that the value of the order is [less 

than $10 million], and that, as a consequence, we lack jurisdiction. 

As noted above, the RFQ provides for the addition of approximately $14 million to 

the evaluated price of any contractor proposing to provide the services in a new 

location. In the foregoing connection, the solicitation explained as follows: 

The Government will make award to the responsible offeror whose 

offer conforms to the solicitation and is determined to be the lowest 

price technically acceptable offer including any Government transition 

costs if a move is required. The Government currently uses data center 

hosting services under the GSA FTS 2001 contract. The current TECC 

hosting services are currently provided by Verizon Business Services. 

The hosting facility is located in Manassas, VA. The TECC is a critical 

data center for USCIS and must continue to operate during any 

transition to a new hosting location. Therefore, new [government 

furnished] equipment (equivalent to the [government-furnished 

equipment] located in the current hosting environment) along with 

data circuits must be procured, installed, and configured in any new 

hosting location. In addition, existing hosting services and existing 

data circuits would need to be maintained during the migration from 

the current TECC environment to a new hosting location. The 

Government estimates it would incur costs of $13,895,944 for the 

equipment acquisition, configuration, data circuits, and continued 

hosting services during migration. Therefore, the sum of $13,895,944 

will be added to the total price (including options) of all proposals 

requiring a migration from the current TECC environment/location to a 

new environment/location. 

RFQ at 5. 

The protester argues that because the RFQ provides for the evaluated prices of the 

non-incumbent contractors to include the costs associated with transition to a new 

location, these costs should be considered part of the value of the order. The agency 

argues in response that the value of the task order here is the value of the services to 

be furnished pursuant to the order only--that is, the costs associated with transition 

to a new location should not be considered as part of the value of the order because 
Page 3 B-404845 

the government is not asking the contractor to incur, and will not be compensating 

the contractor for, these costs. 

We have previously recognized that there are circumstances in which the successful 

contractor’s proposed price is not the sole determinant of the value of an order, see, 

e.g., U.S. Bank, B-404169.3, Feb. 15, 2011, 2011 CPD ¶ 43 at 3-4; ESCO Marine, Inc., 

B-401438, Sept. 4, 2009, 2009 CPD ¶ 234 at 5-6. In these cases, the operative inquiry 

concerns the value of the goods or services being provided, and for which the 

contractor is, in fact, being compensated, under the order. Here, it is apparent that 

the agency will not be compensating the contractor for the costs of acquiring and/or 

configuring equipment necessary for performance of the order. Rather, the 

government will bear these costs apart from the task order and the costs will be 

assessed to contractors solely for the purpose of evaluation in the task order 

competition. Since the costs do not reflect a value to be provided by the contractor 

under the order for which it will be compensated, the value of these costs cannot be 

considered for the purpose of invoking our task and delivery order protest 

jurisdiction. Because it is also apparent from the record that, unless the costs 

associated with the transition to a new location are included, the value of the order 

in question is less than $10 million, we conclude that we do not have jurisdiction 

over the protest. Accordingly, Qwest’s protest is dismissed.2

Lynn H. Gibson 

General Counsel 

 

2

 While we do not have jurisdiction to entertain the protest, we point out that the 

above evaluation scheme appears to be inconsistent with Federal Acquisition 

Regulation (FAR) § 45.202, which provides that the offered prices of contractors 

possessing government-furnished property should be adjusted by applying, for 

evaluation purposes, a rental equivalent evaluation factor. The stated scheme 

appears to be inconsistent with this guidance in that it attributes to the evaluated 

prices of offerors other than the incumbent the full cost of the new equipment to be 

acquired by the government, as opposed to merely its rental equivalent value; the 

stated scheme also appears to be inconsistent FAR § 45.202 in that it fails to provide 

for application of a rental equivalent evaluation factor to Verizon’s offered price to 

take into account the value of the government-furnished equipment already in its 

possession.