Protest Involving Option Provision in Solicitation

The Defense Logistics Agency (DLA) and a bidding firm separately requested reconsideration of a decision sustaining a protest that the agency had improperly included an option provision in its solicitation. In the alternative both requested that, if the prior decision is affirmed, the recommendation to terminate the contract be reconsidered. Upon reconsideration, DLA did not show that the bid protest was untimely and not for consideration by GAO. Although DLA did not improperly include the option provision in the invitation for bids (IFB), its decision to exercise the option at the time of award and to evaluate bids on the basis of prices offered for both basic and option quantities was improper. Since DLA knew its firm requirements for which funds were available, it should have amended the IFB to reflect its actual needs. The contracting agency should reconsider its conclusion that it is not in the best interest of the government to terminate the contract for convenience, since the contractor did not furnish any evidence to support its estimated termination costs. The fact that the contractor was in default on one delivery and might be in default on another, due to difficulty in obtaining necessary equipment, cast doubt that termination costs for equipment would be $500,000.