Protest Involving Contract Modification

B-196029.2: Jun 30, 1980

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A firm protested the General Services Administration's (GSA) modification of a contract with the awardee for a material handling system for the Social Security Administration. The protester contended that the modification compromised the competition upon which the award had been based. The record showed that the specifications in the contract described a mail tray delivery system. A base bid which included the delivery system, installation and 22 mail tray carts, a bid to supply 66 additional mail tray carts, and a bid for adjustment and maintenance were invited. Bids were opened on May 31, 1979, with the low total bid being submitted by the awardee. The contract was awarded on June 26, at which time the awardee was requested to execute and return a copy of the contract, and performance and payment bonds. However, before the contract and bonds were returned to GSA, the awardee advised the contracting officer that it was unable to fulfill the Government's need within the necessary time period. In addition, the awardee submitted a value engineering change proposal in which the awardee offered a substitute system for the one solicited at a lower price. The contracting officer advised the awardee on August 1 that the Government's acceptance of the awardee's bid consummated a binding contract; that the contract would be terminated for default if payment and performance bonds were not submitted promptly; and that the awardee's engineering change proposal would not be reviewed until that submission. The bonds and the executed contract were furnished on August 10, and a notice to proceed was issued with the contract completion date set as August 26, 1980. Additionally, on October 6, 1979, the contracting officer issued a change order to the awardee's contract to incorporate the engineering change proposal at a savings to the Government. GAO held that the issuance of the change order to accept the contractor's value engineering change proposal distorted the competition on which the award was based and was improper. Accordingly, the protest was sustained. However, GAO could not recommend any practical remedial action that would be in the best interest of the Government since GSA advised that the installation of the equipment has been completed.

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