[Protest of Federal Prison Industries, Inc. Determination To Modify Contract]

A firm protested: (1) a Federal Prison Industries decision to modify an existing contract rather than compete for its requirements; and (2) protested the original sole-source award. GAO will only consider protests concerning contract modifications where it is alleged that the modification has gone beyond the scope of the original procurement and should have been the subject of a new procurement. If a contract, as modified, is materially different from the original contract, the subject of the modification should have been competitively procured unless a sole-source award was appropriate. GAO found that the modification included the delivery of equipment and on-site performance of manufacturing that was never contemplated by the parties under the original agreement. Therefore, GAO determined that the modification was beyond the scope of the original contract and should have been procured competitively. GAO also found that the record did not support an agency assertion that the sole-source contractor had been the only firm capable of providing the product for the original sole-source award. Therefore, GAO held that both the modification and the initial sole-source award were improper. Accordingly, the protest was sustained, and GAO recommended that: (1) the procurement be reopened; (2) other firms be allowed to compete; and (3) the contract be terminated for the convenience of the government if the contractor is not the successful competitor.