GAO sustains protest of Air Force contract

In an unusual move, the Government Accountability Office sustained a protest bid from a contractor that said the Air Force violated acquisition laws by modifying a contract without holding a new competition.

Poly-Pacific Technologies Inc. alleged that Robins Air Force Base in Georgia improperly changed the scope of a contract for supplying and recycling abrasive plastic material that is used to scrape paint and other coatings off aircraft. Last week, GAO ruled that the modification was substantial enough to require the Air Force to hold a new competition.

"The fact that the agency still requires plastic media for its equipment needs … does not afford the agency unlimited latitude to modify the way in which it contracts to meet those requirements," GAO stated.

The 1984 Competition in Contracting Act requires that the government hold full and open competitions when it buys goods and services.

"You should document a sole-source justification or hold a new competition for additional work" when a contract is significantly modified, said Chip Mather, a former contracting officer for the Air Force and co-founder of Acquisition Solutions Inc., a consulting company in Oakton, Va.

Determining whether or not a modification is significant enough to require a new competition is somewhat subjective, he said, although past GAO decisions serve as a guide. "That's where judgment comes in. There are no hard or fast rules," Mather said.

GAO's decision is unusual for two reasons. First, the agency does not usually review contract modifications after a contract has been awarded. "Such matters are related to contract administration and are beyond the scope of our bid protest function," GAO stated in its decision. Exceptions, however, are allowed when the protester says the contract modification significantly altered the original contract, as in the current case.

The decision also is unusual because it involves a complaint about a contract whose scope has been reduced. Challenges involving contracts that grow in size are more common, largely because vendors that lose the bid complain that they are missing out on work opportunities.

The original contract, awarded in April 2002, specified that the contractor, U.S. Technology Corp., was responsible for providing the Air Force with the plastic material as well as recycling the material once it was used.

According to the GAO decision, the Air Force eliminated the recycling requirement from the contract in May 2003 after learning that the Environmental Protection Agency was investigating UST for improperly dumping used plastic material. The modified contract allowed UST to dispose of the plastic waste instead of recycling it.

Poly-Pacific, a small plastics company based in Ontario, Calif., said that it tried to learn about these contract changes and even traveled to Robins air base to meet with contracting personnel, but it was unable to learn of the modified contract until February 2005. Within 10 days, it filed a protest with GAO.

GAO's decision supports Poly-Pacific's view that the contract modification constituted such a substantial change that a new competition was warranted.

"In our view, the modification resulted in a material and fundamental change to the nature of the work that changed the field of competition and that work, therefore, should have been competed on a full and open basis," GAO stated. It added that if the Air Force held a competition based on the modified contract, it would likely result in more competition and lower prices.

"We felt… Robins Air Force Base wasn't protecting the government's interest," said Ron Ward, sales manager for Poly-Pacific.

By protesting what he considers improper contracting actions, Ward said he aims to save the government money. "We don't do it willy-nilly. We feel we're doing what's best for the government," he said.

GAO recommended that the Air Force terminate the modified contract with UST and revert to the original contract or hold a new competition for the modified contract. It also recommended that the Air Force reimburse Poly-Pacific for the costs of the protest.

Ward estimated those costs to be between $5,000 and $10,000.

He added that if the Air Force decides to hold another competition, Poly-Pacific intends to bid on it.

An Air Force spokesman said the agency is carefully considering the GAO recommendations and will report to the GAO after its review.