Second Request for Reconsideration

A firm asked GAO to reconsider a decision which sustained a protest against the award of a contract to the protester. The invitation for bids was for refuse collection and disposal services. The protest had been sustained because the agency failed to advise the offerors of its plans to increase the number of garbage containers it proposed to provide. GAO felt that the imminent availability of more containers might yield a substantial reduction in bid prices. Therefore, GAO recommended that the protester's contract renewal option should not be exercised and that the agency should conduct a new procurement. GAO sustained the original protest because contracting personnel cannot make an award with the intention of changing either the specifications or the conditions of performance materially, as here. The Government's desire to continue contracting with the incumbent contractor in order to permit the firm to write off start-up and equipment costs is not a basis recognized for option exercise under Defense Acquisition Regulations (DAR). The protester argued that discussions of the DAR were irrelevant. The agency also asked GAO to reconsider its decision because such contracts are competed and awarded with the implicit understanding that the contractor will perform for 3 years, because the service is highly capital intensive. In this case, the protester competed for and was awarded a 1-year contract with options, not a 3-year contract, and the DAR govern the exercise of these options. They do not permit the Government to award a 3-year contract under the guise of a single-year contract with 2 option years. They expressly require the contracting officer to investigate whether each option year price is the best price available for the option year. The agency also argued that time spent per residence was the basis for computing bids on these contracts and not the types of containers used. GAO will not consider evidence on reconsideration that an agency could have, but did not, furnish during the initial consideration of a protest. GAO held that the increase in the number of containers was a substantial change in the conditions of performance and that the agency should have advised prospective bidders of this impending change. The agency should open bids under the new solicitation and award the contract to the lowest bidder for the option year. Accordingly, the decision was affirmed.