Government Contracts Modification Was Outside Scope of Awarded Contract
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Wednesday, January 8, 2020

Modification Was Outside Scope of Awarded Contract

By Government Contracts Editorial Staff

A modification to a contract for the purchase of a squad variable powered scope was improper because the modification included prohibited changes and caused a material increase in the contract’s value. The S-VPS “is a low profile, wide field of view, passive scope for near-range [small arms] engagements,” and it includes a “non-caliber specific reticle.” In the initial procurement, the awardee proposed a wire reticle at a price of $13.8 million, while the other offerors proposed a “more-expensive glass-etched or hybrid reticle” with prices between $27 million and $41 million. Three months after award, the government modified the awarded contract to include a glass-etched internal reticle with edge illumination and related circuitry. The modification increased the contract value by $9.3 million, or approximately 77 percent, to $21.4 million. The parties disputed whether the modification was a permissible in-scope change under the solicitation’s Future Reticles provision.

Material Change. The Comptroller General sustained the protest, finding that under the plain meaning of the Future Reticles provision, the illumination modification was outside of the scope of the awarded contract. In determining whether a contract modification is beyond the scope of the underlying contract, the relevant question is whether there is a material difference between the modified contract and the contract that was originally awarded. Here, the Future Reticles provision stated “[t]he vendor shall allow for future reticle designs,” but the next section stated “[t]here shall be no changes to the S-VPS Scope design when changing to a new reticle, other than the reticle itself.” When these clauses were read together, it was clear that that a proposed scope had to allow for “future reticle designs” but, “when changing to a new reticle,” “[t]here shall be no changes to the S-VPS Scope design” “other than the reticle itself.” The government’s and awardee’s argument that the provision allowed for design changes that were internal to the S-VPS was not consistent with the plain meaning of the provision, which explicitly prohibited concurrent design changes. Finally, the modification was material in terms of contract value—approximately 95 percent of the base requirement—and even if the purchase of a standalone glass-etched reticle was permitted by the solicitation, the illumination was a material part of the modification. The Comptroller General recommended the government rescind the modification and reexamine its options to procure a glass-etched reticle. (Leupold Stevens, Inc., 34 CGEN ¶116,613)

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