Request for Reconsideration

A Federal agency requested reconsideration of a portion of a GAO decision which sustained a firm's protest against certain option provisions contained in a solicitation for data processing equipment and services. The agency had awarded the contract to another firm with the option provisions intact pending a review of this request for reconsideration. The solicitation contained a projection of system requirements for the first 5 contract years and an anticipated 10-percent annual growth rate for the subsequent 5 years. Consequently, offerors were required to propose specific system configurations and prices for only the first 5 years. Prices for annual options for the subsequent 5 years were negotiable, but were not to exceed the vendor's then-current schedule or commercial process. GAO objected to the options for the subsequent 5 years because they were indefinite with respect to equipment and technical requirements and were not based upon firm fixed prices as required by Federal regulations. The agency disagreed with this aspect of the decision and contended that automatic data processing equipment acquisitions are exempt from the coverage of the cited regulations. As the contractor's only real commitment was to agree at some future time about the level of service and equipment to be provided and at what price, the renewal provisions of the contract removed them from the realm of options. GAO remained unpersuaded that these provisions were proper. Thus, its prior decision was affirmed, and the contract renewal provisions for the subsequent 5 years should be deleted.