[Request for Reconsideration of Decision Sustaining Protest Against Navy Contract Award]

The Navy and two firms requested reconsideration of one firm's sustained protest against a Navy contract award for overhaul services to the second firm. GAO had: (1) held that the Navy improperly accepted the awardee's late bid modification, which took exception to the material terms of the solicitation; and (2) recommended that the Navy terminate the contract and reopen discussions. The Navy and the awardee contended that new evidence demonstrated that the awardee timely withdrew the material deficiencies from its bid, while the protester argued that reopening discussions would give the awardee an unfair opportunity to retain the contract. GAO held that: (1) the awardee's submission of a document stating order of precedence did not effectively remove the unacceptable terms of its proposal, since the Navy still found it necessary to secure a withdrawal of the unacceptable terms from the awardee's bid; (2) the fact that numerous discussions took place between the Navy and the awardee after bid opening was further evidence that the award was improper; and (3) reopened discussions would provide the maximum degree of fairness to all offerers. Accordingly, the original decision was affirmed.