GAO: Post-Award Modifications Unfair; Protest Sustained

An agency cannot make material changes to a solicitation after selecting a contractor for award without going back and giving all offerors the opportunity to compete on the revised solicitation.  In GAO Protest of Diebold, Inc., B-404823 (June 2, 2011), the GAO sustained a bid protest because the agency failed to allow the protester to compete on the revised solicitation.

The Diebold GAO protest arose out of a Department of the Treasury solicitation for security and compliance services.  After selecting ADT Security Services, Inc. for award, Treasury sent ADT a draft contract for its review.

The draft contract included a number of provisions that had not been included in the solicitation, including provisions providing for reimbursement of ADT’s travel costs and limitations on ADT’s liability.  ADT also proposed additional limits to its indemnity obligations and potential liability, which Treasury accepted.

Diebold, Inc., an unsuccessful offeror, filed a bid protest with the GAO.  Diebold argued that Treasury had made material changes to its requirements and that if Treasury wanted to include them, it was required to issue an amendment to the solicitation to allow Diebold and other offerors to compete with ADT on an equal basis.

The GAO agreed.  It found that by including the new terms in the draft contract, Treasury had materially altered the terms and conditions of the solicitation.  Citing prior bid protest decisions, the GAO wrote that it is a “fundamental principle of government procurement that competition must be conducted on an equal basis . . ..”  In this case, the GAO held that because the agency did not issue an amendment allowing Diebold to compete under the same terms as ADT, the competition was unequal.  The GAO sustained Diebold’s protest.

The Diebold GAO bid protest decision is a good reminder to small businesses to be on the lookout for unequal treatment in solicitations and awards.  If an agency modifies a solicitation exclusively for the benefit of one of your competitors, you may be able to successfully challenge the award decision.

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