GAO Sustains a Protest of an Out-Of-Scope Contract Modification

December 11, 2019 | By Maria L. Panichelli, Michael A. Richard

Many government contractors do not know that they can protest a modification of a contract that was awarded to a competitor if that modification is materially beyond the scope of the original contract. It’s true: where a contract modification essentially adds a new scope of work—which should have been subject to free and open competition under the Competition in Contracting Act of 1984 (CICA)—a competitor can protest the award of the modification. This is a fairly uncommon event, but a recent case from the Government Accountability Office (GAO) confirmed that such protests can be successful under the right circumstances.

In the Matter of Leupold Stevens, Inc., the Navy issued a solicitation for gun scopes that stated that the scopes must allow for changes to the reticle design, without changing the design of the rest of the scope. The reticle is the lines or crosshairs you see when you look through a scope. Most of the offerors proposed an expensive “glass-etched or hybrid” reticle which could be changed without changing the design of the scope. Their offers ranged between $27 and $41 million. Sig Sauer proposed a much less expensive wire reticle, and its offer was less than $14 million. The Navy, citing the much lower price, awarded the contract to Sig Sauer.

A mere three months later, the Navy issued a contract modification to Sig Sauer to change to a glass-etched reticle, with a price increase of over $9 million, or 77% of the original contract amount. Leupold Stevens protested the contract modification, arguing that the change to the glass-etched reticle required a redesign of the scope, thereby violating the requirement of the original solicitation that the reticle could be changed without changing the scope design. The GAO agreed with Leupold Stevens that the change to the reticle was a contrary to the plain and unambiguous requirements of the original solicitation and was therefore an out-of-scope change. In addition, the GAO held that the change was material because it increased the contract price by 77%. Consequently, the GAO recommended that the Navy rescind the contract modification and obtain the glass-etched reticle through free and open competition as required by law.

The takeaway here for contractors is that you should keep an eye on your competitor’s contracts for out-of-scope or cardinal changes. Such changes can be protested, and such protests are the only mechanism available to keep government agencies from avoiding the competitive process by simply adding to the scope of existing contracts. These protests are not only vital to make sure that your company gets a chance to compete for available work, but also to maintain the integrity of the procurement system. If you find out about an out-of-scope modification to a competitor’s contract and want to explore your options, give us a call.


The information contained in this publication should not be construed as legal advice, is not a substitute for legal counsel, and should not be relied on as such. For legal advice or answers to specific questions, please contact one of our attorneys.

About the Authors

Maria L. Panichelli

Partner

Maria is a partner and the Chair of the Government Contracting department.   She focuses her practice exclusively on federal government contracting and procurement, guiding her clients throughout the entire lifecycle of their...

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Michael A. Richard

Associate

Michael is an attorney in Obermayer’s Government Contracting Department, where he excels at getting clients to the settlement table. Michael’s tenacity is truly a force to be reckoned with. Over the past...

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