## Facts

- The Internal Revenue Service, acting as executive agent for the Department of the Treasury, issued an RFP on January 4, 1989 for the Treasury Multi-User Acquisition Contract (TMAC) to provide office automation systems, software, and maintenance/support affecting approximately 130,000 employees.
- The solicitation used a negotiated “best overall value to the Government” approach, comparing technical feature value against overall cost.
- The RFP stated technical factors were more important than price, but cautioned against paying a significantly higher cost for only slightly superior technical features.
- The technical evaluation was organized into two major technical features (100 points each) with subfactors assigned equal point values within each feature; cost/price was assigned zero points for scoring.
- The IRS selected AT&T Federal Systems for award over Lockheed Missiles & Space Co., Inc.
- Lockheed protested, alleging the IRS (1) altered the relative importance of technical subfactors during evaluation contrary to the RFP, and (2) made an irrational or solicitation-inconsistent tradeoff between technical merit and cost.
- The General Services Administration Board of Contract Appeals denied the protest; Lockheed appealed to the Federal Circuit.

## Issues

1. Whether the agency’s evaluation impermissibly departed from the RFP by effectively reweighting technical subfactors or using unstated evaluation factors.
2. Whether the agency’s best-value cost-technical tradeoff was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.
3. Whether Lockheed showed prejudice—i.e., a substantial chance of award but for the alleged procurement errors.

## Decision

- The Federal Circuit affirmed the board’s denial of Lockheed’s protest and sustained the award to AT&T.
- The court held the agency acted within its discretion and the evaluation and tradeoff were rational and consistent with the solicitation’s best-value framework.
- The court agreed that the RFP’s point scheme functioned as guidance and did not require a purely mechanical weighting that prevented evaluators from recognizing the practical importance of certain subfactors.
- The court found no improper use of new or undisclosed evaluation factors and no distortion of the solicitation’s stated criteria.
- Lockheed failed to demonstrate prejudice sufficient to overturn the award.

## Legal Principles

- Bid protest review applies a deferential standard: agency procurement action is set aside only if arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.
- A protester must show both a procurement error and prejudice, typically that it had a substantial chance of award absent the error.
- In negotiated best-value procurements, agencies have broad discretion to make qualitative technical judgments and to trade technical merit against cost, provided the decision is rational and consistent with the solicitation.
- A numerical scoring or point structure may serve as a general indicator of importance and does not, by itself, bar evaluators from treating certain listed subfactors as more significant when applying the stated evaluation scheme, so long as no unstated factors are introduced.

## Conclusion

The Federal Circuit upheld the TMAC award to AT&T, concluding that the IRS’s technical evaluation and cost-technical tradeoff reasonably applied the RFP’s best-value criteria and that Lockheed did not show a prejudicial deviation from the solicitation or governing procurement law.


Lockheed Missiles & Space Co. v. Bentsen, 4 F.3d 955 (Fed. Cir. 1993)