Complaint Regarding Contract Modification

A firm filed a complaint with GAO regarding a modification of a contract by a Federal agency grantee. The firm appealed the decision by the Federal agency which held that the grantee properly used the changes clause of the contract to reduce the scope of work involved and that readvertisement of the procurement was therefore not necessary. After the protester obtained copies of the original plans and compared them to the awardee's work in progress, it protested to the grantee alleging that: (1) changes reduced the amount and difficulty of the work, (2) these changes represented an attempt to compensate the awardee for a claimed mistake-in-bid, and (3) the integrity of the competitive procurement system had been compromised as it had not been given an opportunity to bid on the project as actually constructed. The agency found that, even using the revised plans, the protester's price for the job would still have been more than the awardee's, but did agree that there was no way to predict what the bids would have been if the project had been readvertised. Readvertisement was ruled out, however, because the agency found that the changes were not in the nature of cardinal changes and that they had been properly dealt with under the changes clause of the contract. Despite a question as to the timeliness of the complaint, GAO considered the protest on its merits because the issues involved a Federal agency grantee. The GAO consideration was limited to whether the decision was reasonable in light of the agency's regulations which encourage free and open competition. In the opinion of GAO, the execution of the modification, the making of changes which were at least arguably significant, and the simultaneous issuance of the notice to proceed, were tantamount to the award of a contract with the intent to modify it. These actions effectively distorted the competition on which the award was based. Therefore, GAO could not conclude that the agency decision was reasonable, and the complaint was sustained. A bidder must show that it had a substantial chance of receiving an award before it is eligible for reimbursement of bid preparation costs. The protester did not make such a showing and, since what it actually would have bid for the job under revised specifications is an open question, GAO did not consider the question of whether bid preparation costs could be paid.