BNUMBER:  B-270228.4
DATE:  August 21, 1996
TITLE:  Defense Logistics Agency--Reconsideration

**********************************************************************

Matter of:Defense Logistics Agency--Reconsideration

File:     B-270228.4

Date:August 21, 1996

Jerome C. Brennan, Esq., and Robert E. Sebold, Esq., Defense Logistics 
Agency, for the requester.
Craig A. Holman, Esq., Dorn C. McGrath III, Esq., and Richard L. 
Moorhouse, Esq., Holland & Knight, for the intervenor.
Charles W. Morrow, Esq., and James A. Spangenberg, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

1.  Request for reconsideration of prior decision is denied where 
requester reiterates arguments which merely reflect the requester's 
disagreement with the decision, but fail to show that the initial 
decision contains either errors of fact or law and fails to present 
information not previously considered that warrants reversal or 
modification of the decision.

2.  Recommendation that prevailing party in sustained protest be 
reimbursed protest costs is appropriate in case of first impression 
where the agency's actions failed to meet applicable statutory 
requirements.

DECISION

The Defense Logistics Agency (DLA) requests reconsideration of our 
decision in Occu-Health, Inc., B-270228.3, Apr. 3, 1996, 96-1 CPD  para.  
196, which sustained Occu-Health's protest against the award of a 
contract to EHG National Health Services, Inc., under request for 
proposals (RFP) No. S2202A-95-R-0001, for occupational health and 
industrial hygiene services.  

We deny the request for reconsideration.

The RFP incorporated the standard "Evaluation of Options" clause, set 
forth at Federal Acquisition Regulation (FAR)  sec.  52.217-5, which 
informed offerors that the government would evaluate offers by adding 
the prices for the base period and options years, unless the 
government determined in accordance with FAR  sec.  17.206(b) that 
evaluation of options is not in the best interests of the government.  
Prior to the receipt of best and final offers (BAFO), DLA determined 
that it would not exercise the options under the contract; however, 
DLA did not advise the offerors of this determination.  Subsequently, 
in evaluating BAFOs and selecting EHG for award, DLA determined that 
it was not in the government's best interest to include the option 
year prices in the evaluation of offers for award purposes.  

Occu-Health protested that the agency should have amended the RFP 
prior to receipt of BAFOs to inform offerors that option year pricing 
would not be evaluated; it asserted that it could have significantly 
reduced its base year price had it been apprised of the change in 
requirements and would have been in line for award.  DLA essentially 
argued that FAR  sec.  17.206(b) afforded the agency unfettered discretion 
not to evaluate options in making the award, notwithstanding when it 
became aware that the agency would not need the options.  We found 
that, given the statutory requirements in 10 U.S.C.  sec.  2305(a)(1)(A) 
and (b)(4)(B) (1994) that an agency inform offerors of its actual 
needs and select the most advantageous offer to the government, DLA 
had acted improperly by failing to inform offerors of its changed 
needs, and could not rely upon FAR  sec.  17.206(b) to avoid this 
obligation when it knew, at least prior to the receipt of BAFOs, that 
its needs had materially changed and that it would not be evaluating 
options.  

In its request for reconsideration, DLA primarily argues that our 
decision is inconsistent with prior decisions, which stated that an 
agency may make the decision not to evaluate option year prices at any 
time prior to award, and that we have now announced a new rule.  DLA 
also asserts that, because we announced a new rule, it should not have 
to pay protest costs.  

The decisions, Foley Co., 71 Comp. Gen. 148 (1992), 92-1 CPD  para.  47; 
Schmidt Eng'g & Equip., Inc., B-250480.5, Dec. 17, 1993, 93-2 CPD  para.  
324; Mobile-Modular Express, Inc., B-250790, Feb. 22, 1993, 93-1 CPD  para.  
159, that DLA argues are inconsistent with our prior decision in this 
matter are the same decisions that DLA argued, during the protest, 
supported its interpretation that FAR  sec.  17.206(b) granted it 
unfettered discretion to decide at any time not to evaluate options.  
We did not consider the cited decisions controlling because none 
involved circumstances under FAR  sec.  17.206(b) where the agency during a 
negotiated procurement had the opportunity at least prior to receipt 
of BAFOs to inform offerors of its intention not to evaluate option 
years, but did not do so; instead, each of the cited decisions 
involved such determinations made after bids were opened under sealed 
bid procurements.  

We also do not agree that we created a new rule.   As indicated above, 
the prior cases construing FAR  sec.  17.206(b) did not involve pre-BAFO 
situations, and there are no cases of which we are aware that suggest 
the language of this FAR section  permits, or was intended to permit, 
an agency to avoid informing offerors that options will not be 
evaluated when the agency knows this and has a reasonable opportunity 
to so notify offerors prior to submission of BAFOs.  In this regard, 
the rule that when the government's needs change the agency is 
required to notify offerors of its changed needs and afford them the 
opportunity to make, and the government to obtain, the most 
advantageous offers is mandated by 10 U.S.C.
  sec.   2305(a)(1)(A) and (b)(4)(B).  Notwithstanding the language in FAR  sec.  
17.206(b), DLA could not reasonably rely upon an interpretation of 
that regulation that abrogated the requirements established by 
statute.  See International Limousine Serv., B-206708, July 26, 1982, 
82-2 CPD  para.  77.  

This being so, we see no merit to DLA's assertion that DLA should not 
have to pay protest costs as we recommended in our decision.  Since 
recovery of protest costs is intended to relieve protesters of the 
financial burden of vindicating the public interest, and not as an 
award to the protester or a penalty against the agency, the 
recommendation that Occu-Health recover its protest costs is 
appropriate.  See Agency for Int'l Dev.; Development Alternatives, 
Inc.--Recon., B-251902.4; B-251902.5, Mar. 17, 1994, 94-1 CPD  para.  201.

The request for reconsideration is denied.

Comptroller General
of the United States