Outdoor Venture Corporation, B-279777, July 17, 1998

B-279777 Jul 17, 1998 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights DIGEST Protest that agency improperly accepted a price reduction for a delivery order issued under an option to another firm's contract without first subjecting the requirement to competition is denied where record shows that agency properly made original contract award on a sole-source basis for purposes of maintaining an industrial mobilization base producer's manufacturing capacity. Considerations relating to maximizing competition are secondary to the agency's mobilization base needs. The contract was awarded to TBE in 1996 on a sole-source basis. The agency's justification for the award was that TBE was an industrial mobilization base producer that required the work contemplated under the contract in order to remain a viable producer of the tents. View Decision Matter of: Outdoor Venture Corporation File: B-279777 Date: July 17, 1998 DIGEST Attorneys DECISION Outdoor Venture Corporation (OVC) protests the issuance of a delivery order under contract No. SPO100-96-D-5068, awarded to Teledyne Brown Engineering (TBE) by the Defense Logistics Agency (DLA) for a quantity of tents. OVC maintains that the delivery order amounts to an improper sole-source acquisition. We deny the protest. The contract was awarded to TBE in 1996 on a sole-source basis. The agency's justification for the award was that TBE was an industrial mobilization base producer that required the work contemplated under the contract in order to remain a viable producer of the tents. See 10 U.S.C. Sec. 2304(c)(3) (1994). The contract included a base year and 1 option year. The unit price originally included in the contract was $9,700 for the base year quantity and $9,600 for the option quantity. The agency issued two delivery orders against the base term contract at the $9,700 price. Thereafter, in April 1997, DLA exercised the option in TBE's contract and simultaneously issued a delivery order for 400 tents at a unit price of $7,700; the price reduction was offered by TBE in a letter to the agency dated March 28, 1997. In April 1998, the agency issued a second delivery order against the option contract, this time for 305 tents at a unit price of $8,900. The record shows that this price reduction was offered after TBE was contacted to ascertain whether the firm would offer the same price for these units that it had offered for the 400 units ordered in April 1997. TBE responded by offering the price noted above. OVC's protest is against the award of this latest delivery order for 305 units. OVC argues that, in obtaining a reduction in price for the 305 units, the agency improperly engaged in post-award negotiations with TBE. According to the protester, once the agency negotiated with TBE, it was obliged to conduct a competitive procurement for the requirement, thereby affording other manufacturers an opportunity to offer a lower price than TBE's. In support of its position, OVC directs our attention to two decisions of our Office, Magnavox Elec. Sys., Co., B-231795, Nov. 2, 1988, 88-2 CPD Para. 431, and Varian Assocs., Inc., B-208281, Feb. 16, 1983, 83-1 CPD Para. 160, aff'd, Department of the Army--Recon., B-208281.2, July 12, 1983, 83-2 CPD Para. 78. According to the protester, these decisions support its position that, where an agency determines that a lower price might be available for option quantities, the agency must provide all potential offerors an opportunity to compete for those quantities, instead of engaging in post-award negotiations with only the original awardee of the contract. There is no merit to OVC's position. Military agencies have authority to conduct procurements using other than full and open competition (and may properly award sole-source contracts to a particular concern) for purposes of establishing or maintaining industrial mobilization base sources of supply. 10 U.S.C. Sec. 2304(c)(3); Magnavox Elec. Sys., Co.; Ferranti Techs., Inc., B-247316.2, B-247316.3, May 28, 1992, 92-1 CPD Para. 475 at 4. Where a military agency makes a sole-source award for purposes of maintaining a particular supplier of an item, concern for maximizing competition is secondary to the agency's industrial mobilization needs. Id. DLA made its sole-source award to TBE because of its finding of a risk that the firm would be unable to maintain its tent manufacturing operations without the contract. OVC does not challenge the propriety of the agency's original rationale or award decision, and we have no basis to question either. This justification is not rendered invalid by the fact that the agency obtained lower prices from TBE after award, or by OVC's asserted ability to offer even lower prices if it were permitted to compete. The need to maintain TBE as a viable producer by permitting it to perform this contract remains, regardless of the possibility that lower prices would be available through competition.