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Vendor Successfully Protests Modification of a Contract

by | Dec 18, 2019 | Government Contracts

A recent GAO decision demonstrates why a vendor should continue to track contracts it lost for future modifications made by the government. When the Navy modified a contract that increased the contract value by 77%, a competitor saw the Navy’s public notice of the modification and successfully protested the modification. 

After the Navy competed a solicitation for a scope for special forces rifles, it awarded the contract to Sig Sauer Inc. The price was approximately $14 million. Three months later, the Navy modified Sauer’s contract to require a more sophisticated scope, added approximately $10 million which increased the contract’s value by 77%, and gave public notice of the modification in the DoD Daily Digest Bulletin. 

Leupold Stevens, Inc., which had unsuccessfully bid on the original contract, saw the notice and protested to the Government Accountability Office (GAO), arguing that the modification was beyond the scope of the original contract and, therefore, should have been competed with other scope vendors like itself.

 The Navy responded that, because a clause in the original contract allowed it to get the more sophisticated scope from Sauer, the modification was within the scope of Sauer’s contract.

GAO disagreed with the Navy. Although GAO does not generally hear protests involving contract administration issues like modifications, even significant modifications, GAO will consider protests claiming that the modification is beyond the scope of the original contract and “therefore should have been the subject of a new procurement.”

To determine whether a modification is within the scope of the original contract,  GAO looks at whether the modification has made a “material” change to the contract, considers “the circumstances attending the procurement that was conducted; examine changes in the type of work, performance period, and costs between the contract as awarded and as modified; and consider whether the original contract solicitation adequately advised offerors of the potential for this type of modification and thus whether the modification could have changed the field of competition.”

Here, GAO sustained the protest for two reasons. First, the contract terms did not, as the Navy had argued, allow the change in the first place. Second, the modification involved a “significant cost increase.” GAO recommended that the Navy rescind the modification and reexamine options for getting the more sophisticated scope. 

The decision is a helpful reminder that unsuccessful offerors on high-value solicitations might find it profitable to track modifications to those contracts. The Federal Procurement Data Base (fpds.gov) and Beta.SAM.gov, as well as the DoD Daily Digest Bulletin mentioned in the GAO decision, are potential sources of this marketing information.   

Leupold Stevens, Inc., B-417796, Oct. 30, 2019.

Berenzweig Leonard  is teaming up with  Red Team Consulting  for a monthly newsletter featuring reports on recent contract decisions, recent upcoming contracts, key protest decisions, events, Words of Wisdom, and more. This post was published in the December 2019 newsletter. To sign up for our govcon newsletters, please email [email protected].

Terry O’Connor is a Partner at Berenzweig Leonard. Terry and Stephanie Wilson lead the firm’s Government Contracts practice. Terry can be reached at  [email protected].