Protest of Contract Modification

A firm protested a modification issued by the Social Security Administration (SSA) under a contract option for the acquisition of disk drives. The modification substituted a newer type of disk drives and changed the terms of the contract. The protester contended that SSA should have procured the newer model disk drives competitively rather than by modifying the option. SSA contended that: (1) the protester was not an interested party under bid protest procedures; (2) the protester's various protests were untimely under the procedures; (3) the modification was a matter of contract administration not for consideration by GAO; and (4) the modification was proper. The protester filed a substantial expansion of its original protest with GAO. GAO found the protester's additional submission to be only an explanation of the rationale for its fundamental protest. As a potential offeror on a new procurement, the protester had a direct and established interest in the opportunity to compete for the award. Consequently, the protester was an interested party. However, GAO does not consider protests against contract modifications unless it is alleged that the modification exceeded the scope of the contract and should have been the subject of a new procurement. The modification's conversion of the option from a purchase to a 5-year, lease-to-ownership plan with continuing performance requirements had shifted the burden and risk of nonperformance from the Government to the contractor. GAO concluded that a change of this magnitude in the fundamental relationship of the contracting parties goes beyond the scope of the original contract and had resulted in a contract which was substantially different from the one originally competed. Accordingly, the protest was sustained.