BNUMBER:  B-274990; B-274990.2
DATE:  January 14, 1997
TITLE:  Master Security, Inc.

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

Matter of:Master Security, Inc.

File:     B-274990; B-274990.2

Date:January 14, 1997

Robert D. Banfield, Esq., and Paul J. Seidman, Esq., Seidman & 
Associates, P.C., for the protester.
Manuel B. Oasin, Esq., and Harmon Eggers, Esq., General Services 
Administration, for the agency.
Behn Miller, Esq., and Christine S. Melody, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

1.  Modifications to existing requirements contract for security guard 
services which increased the number of hours and added contract sites 
were proper since:  (1) the solicitation advised offerors that the 
winning contractor would perform all the agency's security guard 
requirements in the specified geographic area over a 5-year period; 
(2) the increase in service hours and locations occurred within the 
solicitation's specified geographic scope; and (3) the nature and 
price of the required security guard services were not changed by the 
modifications and the addition of those requirements therefore would 
have had no impact on the original competition.

2.  Protest challenging modifications to existing contract for 
security guard services on ground that agency used modifications to 
improperly add five sites outside the geographic scope of the 
originally awarded contract is denied where record shows that agency 
properly acquired services at the five new sites using small purchase 
procedures.

3.  Where record shows that agency had an immediate, critical need for 
security guard services at a site, but was not in a position to 
proceed with fully competing the requirement, agency's utilization of 
small purchase procedures to make interim buys on an as-needed basis 
was proper.

DECISION

Master Security, Inc. (MSI) protests several modifications to contract 
No. GS-03P-95-DWD-0001, awarded by the General Services Administration 
(GSA) to Knight Protective Services for armed and unarmed security 
guard services at GSA facilities located in Baltimore City and 
Baltimore County, Maryland.  MSI contends that GSA has improperly 
modified the Knight contract by issuing numerous modifications which 
have significantly increased the number of required guard service 
hours and contract sites beyond the original requirement.

We deny the protest.

The Knight contract was awarded on June 19, 1995 and called for the 
awardee to provide armed and unarmed guard services, on a 
delivery-order basis, for GSA facilities located in Baltimore City and 
Baltimore County, Maryland.  The request for proposals (RFP) listed 
nine performance sites in the Baltimore City/Baltimore County area, 
and set forth an estimated quantity of 61,257 "basic" guard service 
hours and 3,000 "emergency" guard service hours per contract year.  

On April 17, 1995, the Alfred P. Murrah federal building in Oklahoma 
City was bombed.  Thereafter, GSA began receiving increased requests 
for security guard services at its federal buildings.  With regard to 
the Knight contract, the record shows that for the first year of 
contract performance, Knight performed 106,407 hours of basic security 
guard services:  77,162 hours were performed at the original 9 
contract locations, while 29,245 hours were performed at 16 new 
Baltimore City/Baltimore County sites which were added during the 
course of the base contract year.  During option year 1--which began 
August 1, 1996--the record shows that Knight performed 135,655 hours 
of basic security guard services:  77,108 hours were performed at the 
original 9 locations; 52,607 hours were performed at the 16 new sites; 
5,047 hours were performed at 5 new sites outside the Baltimore 
City/Baltimore County area; and 893 hours were performed at a site in 
Woodlawn, Maryland, on an emergency, interim basis.

MSI contends that the increases in the number of hours and sites 
constitute improper modifications which exceed the scope of the 
original contract award and must be competed as a new requirement.[1]  
In making this argument, MSI maintains that because the original 
solicitation required offerors to maintain a reserve employee force 
"of sufficient size to cover an increase of 20 [percent] to the basic 
services," any modification which expands the required number of guard 
service hours beyond this percentage constitutes an increase beyond 
the scope of the contract.  MSI also argues that because the 
solicitation identified only nine locations in the Baltimore 
City/Baltimore county area, adding 16 new locations beyond those 
identified in the RFP similarly constitutes an improper increase in 
the contract scope.  Finally, MSI challenges the apparent addition of 
five sites outside
the Baltimore City/Baltimore County area to Knight's contract, as well 
as the orders issued to Knight for services to be performed at the 
Woodlawn site.

Because a contract modification that goes beyond the scope of a 
contract is tantamount to a sole source award that may not be 
justified, we will review a protest challenging a contract 
modification where the allegation is that a modification is beyond the 
contract's scope and therefore should be the subject of a new 
procurement.  Insituform East, Inc., B-272399, Oct. 3, 1996, 96-2 CPD  para.  
134; Webcraft Packaging, Div. of Beatrice Foods Co., B-194087, Aug. 
14, 1979, 79-2 CPD  para.  120.  In determining whether a modification 
constitutes a cardinal change, i.e., whether it improperly exceeds the 
scope of the contract and should be the subject of a new procurement, 
we look to whether there is a material difference between the modified 
contract and the contract originally competed.  CAD Language Sys. 
Inc., 68 Comp. Gen. 376 (1989), 89-1 CPD  para.  364.  As explained below, 
we conclude that the challenged modifications here are 
unobjectionable.

The Baltimore City/Baltimore County Modifications

The record shows that by option year No. 1--which began August 1, 
1996--GSA had added 16 sites to the Knight contract, resulting in a 
total work requirement of 129,715 hours per contract year in the 
Baltimore City/Baltimore County area; the original RFP set forth a 
basic security guard service estimate of 61,257 basic hours and 3,000 
emergency hours at nine identified Baltimore City/Baltimore County 
contract sites.

In examining the materiality of a modification, our decisions have 
considered such factors as:  (1) the contract terms--and whether 
offerors should have reasonably anticipated the modification, see 
Marine Logistics Corp., B-218150, May 30, 1985, 85-1 CPD  para.  614 
(modification to requirements contract for shipping services 
unobjectionable where consistent with solicitation terms); (2) the 
nature of the procured goods or services and the extent of any changes 
introduced by the challenged modification, see Stoehner Security 
Servs., Inc., B-248077.3, Oct. 27, 1992, 92-2 CPD  para.  285 (modification 
which incorporated new type of guard service into basic contract 
improper); and (3) the impact of the modification on competition, see 
Webcraft Packaging, Div. of Beatrice Foods Co., supra (protest 
sustained where record showed that more firms would have entered a 
competition based on the modification's incorporation of a relaxed 
specification). 

In this case, we think the challenged Baltimore City/Baltimore County  
modifications were within the scope of the awarded contract.  This 
procurement involved the award of a requirements type contract, which 
calls for the government to fill all its actual requirements for 
specified supplies or services during a fixed contract period by 
purchasing from the awardee, who agrees to provide them at the agreed 
price.  See Federal Acquisition Regulation (FAR)  sec.  16.503(a).  
Specifically, Section C of the contract's statement of work (SOW) 
described the contract to be awarded as:

     "[a] term or requirements contract . . . for filling all of the 
     agency's requirement for a particular service within a specified 
     time frame.  In this solicitation GSA's requirement is for armed 
     and unarmed guard service in the Baltimore City and Baltimore 
     County [area]."

By defining this contract as a requirements-type contract to be 
performed over a 5-year period, and by identifying--in seven different 
sections of the RFP--the geographic scope of contract performance as 
Baltimore City/Baltimore County, GSA clearly placed all offerors on 
notice that the agency was soliciting for all armed and unarmed guard 
services required by the agency in the Baltimore City/Baltimore County 
area.  Offerors should have expected fluctuations or increases in the 
number of hours and sites; this is because a requirements contract--by 
definition--presupposes uncertainty about actual purchases because it 
is to be used where, as here, the government anticipates recurring 
needs but cannot predetermine the precise quantities or future demands 
at the time of award.  See FAR  sec.  16.501(a); 16.503(b).

In addition to its classification as a requirements contract, other 
contract clauses set forth in the solicitation also advised offerors 
of the potential for quantity increases.   First, the following 
disclaimer introduces the solicitation's work description:

     "PLEASE NOTE [emphasis in original]:  The following listing [of 
     contract sites and hours] is the government's best estimate at 
     this time of the total quantity of service required.  This 
     estimate is not a representation that the estimated quantity will 
     be required or ordered, or that conditions affecting requirements 
     will be stable or normal."

Moreover, by means of an amendment issued to the original RFP which 
set forth the minutes of the pre-proposal conference, offerors were 
specifically advised that the 61,257-hour estimate was included for 
"evaluation" purposes--and that this figure "[might] not reflect" the 
actual total of required hours.  Section C of the solicitation also 
advised offerors that the 61,257-hour estimate constituted "the 
minimum man-hours which have been determined by the [g]overnment as 
essential to perform the work required by the contract."  Consistent 
with this language, the solicitation's pricing schedule required 
contractors to propose their pricing by year and type of service, 
e.g., "BASIC SERVICES, BASE YEAR. Baltimore City, Baltimore County, 
MD," instead of by individual contract site.

Finally, paragraph 3(b) of the contract's statement of work (SOW), 
"Additions Deletions to Man-hours Required," advised offerors that:

     "[the agency] has the unilateral right to order services in 
     excess of [61,257 hours], as long as the increase is within the 
     scope of the contract, and the [c]ontractor will be obligated to 
     provide services at the specified rate shown in [its submitted 
     pricing schedule]."

Despite the above-referenced terms, MSI argues that two other 
solicitation provisions limited the number of hours by which the 
government could increase the basic security guard services contract.  
MSI first contends that because paragraph 3(c)(1) of the SOW, "Reserve 
Productive Personnel," only required offerors to maintain a "reserve 
force" of "sufficient size to cover an increase of 20 [percent] to the 
basic services required," any increase in service hours beyond this 20 
percent of the estimated basic requirement--an additional 12,251 
hours--constitutes an out-of-scope modification.  Alternatively, MSI 
argues that because the solicitation set forth a 3,000-hour emergency 
guard service estimate, any increase beyond 3,000 hours in the basic 
service level constitutes an out-of-scope increase.

We find MSI's interpretation to be unreasonable.  First, interpreting 
the reserve force provision as a service hour cap forecloses the 
possibility of increases based on unusual conditions--a situation 
clearly permitted and contemplated by the disclaimer provision quoted 
above.  Significantly, the reserve force clause does not set forth any 
specific terms or language purporting to limit the amount by which the 
basic security guard service hours or number of contract sites may be 
increased.  Moreover, when read in the context of the entire 
solicitation--particularly the fact that this is a requirements 
contract--we think it clear that the purpose of the 20 percent reserve 
force clause was to cover foreseeable contingencies inherent in 
providing the basic contract services, described in the "Reserve 
Productive Personnel" clause as "e.g., . . . to replace guards on 
scheduled or non-scheduled breaks, sick leave or vacation."

Similarly, with regard to MSI's interpretation of the 3,000-hour 
emergency security guard provision, the solicitation clearly 
envisioned treating basic security guard services and emergency 
security guard services as distinct efforts.  In addition to using 
separate contract line item numbers for these two service types, and 
setting forth different estimates for each (61,257 hours per year for 
basic security guard services and 3,000 hours per year for emergency 
security guard services), the original solicitation specifically 
provided that the need for "emergency" security guard services would 
only arise "in the event of an emergency" and would be procured "in 
addition to the services specified [in the RFP] for the basic 
services."

Although MSI contends that offerors could not reasonably anticipate a 
quantity increase from 61,257 to 134,000 hours, as noted above, since 
the original contract was a requirements contract and contained 
numerous provisions placing offerors on notice of the potential for 
fluctuations in guard service quantity, we think the agency was 
entitled to order during the contract's term whatever quantity of 
guard services the agency actually required in the Baltimore 
City/Baltimore County area, so long as the nature of the guard 
services did not change.  See W. H. Mullins, B-207200, Feb. 16, 1983, 
83-1 CPD  para.  158.  In this regard, it is well established that in a 
requirements contract, the stated solicitation estimates do not act as 
ceilings--but instead constitute benchmarks used by offerors to 
establish their prices, and by agencies to evaluate them.  See Caltech 
Serv. Corp., B-240726.6, Jan. 22, 1992, 92-1 CPD  para.  94 (49 percent 
increase in requirements contract for containerization of cargo 
tonnage unobjectionable where pricing and nature of services did not 
change); Marine Logistics Corp., supra (25 percent increase in 
requirements contract quantity unobjectionable where nature of 
services did not change).  Accordingly, we have  sustained challenges 
to quantity increases under requirements contracts only where the 
nature of the item or services was materially altered by the 
modification.  See Liebert Corp., 70 Comp. Gen. 448 (1991), 91-1 CPD  para.  
413 (modification improper where it was inconsistent with original 
contract's maximum quantity ceiling); American Air Filter Co., Inc., 
57 Comp. Gen. 285 (1978), 78-1 CPD  para.  136 (modification to requirements 
contract which substituted diesel for gasoline engines improper since 
nature of the competed item was materially altered); W. H. Mullins, 
supra (modification of an existing requirements contract for an 
estimated 1,700 tons of specified grade of magnetite rock which 
permitted the purchase of 5,000 tons of a reduced grade of magnetite 
at a newly negotiated price improper).

In contrast, this contract contained no maximum quantity ceilings, and 
as discussed above, clearly contemplated increases in the number of 
required security guard service hours and individual sites, so long as 
the increases were within the specified geographic scope of Baltimore 
City and Baltimore County.  In light of the clear contract terms, and 
consistent with the anticipated duration of contract performance--5 
years--we think it was foreseeable to the original competitors that 
the agency's needs for security guard services could significantly 
increase.  Although the number of hours and sites has increased, there 
have been no changes or modifications in the type of service to be 
performed, in the performance period, or in the prices under the 
Knight contract.  Under these circumstances, we see no basis to 
conclude--nor does MSI allege--that the field of competition would be 
materially changed by the modifications.  Accordingly, we find the 
challenged Baltimore City/Baltimore County modifications to be 
unobjectionable.

The Five Remote Contract Sites Award

On July 8, 1996, shortly before option year 1 began, the record shows 
that GSA issued 10 delivery order modifications to Knight which 
required basic security guard services at 5 contract sites located 
outside the solicitation's identified Baltimore City/Baltimore County 
geographic area.  MSI contends that the addition of these five 
sites--Westminster, Frederick, Columbia, Annapolis and Hagerstown--to 
the Knight contract constitutes an improper modification because they 
are outside the Baltimore City/Baltimore County area.

GSA reports that although services at these sites ultimately were 
ordered from Knight via modifications to the original Baltimore 
City/Baltimore County contract, in fact the awards were not made until 
after a competition using small purchase procedures was held among 
three small business contractors, including Knight.[2]  The record 
shows that on June 24, 1996, the GSA Philadelphia Regional 
Office--which administers GSA's Maryland requirements--received a 
request for basic security guard services at the five sites.  Because 
the cumulative dollar value for the five sites was below $25,000, a 
GSA contracting officer solicited oral quotations pursuant to FAR Part 
13.  Three contractors--including Knight--were solicited by telephone; 
Knight submitted the lowest quote.  On June 25, the contracting 
officer selected Knight for award.  Because Knight was already 
performing the Baltimore City/Baltimore County contract, the 
contracting officer awarded the small purchase contract through a 
series of 10 delivery orders to Knight's current contract; these 10 
modifications are the subject of MSI's current challenge.

Although the orders were issued as modifications to Knight's existing 
contract, the record shows that the agency properly competed the 
requirements and properly selected Knight for award in accordance with 
the FAR small purchase procedures.[3] We therefore see no basis to 
object to the awards to Knight.

The Woodlawn Requirement

On August 7, 1996, prior to filing its current protest, MSI filed a 
protest at this Office challenging a modification issued by GSA under 
the current Knight contract--providing for the performance of security 
guard services at the Health Care Financing Administration (HCFA) 
facility, in Woodlawn, Maryland.  In that protest, MSI contended that 
the modification was improper in part because it required 
substantially different security guard services from those required 
under the Knight Baltimore City/Baltimore County contract.

On August 21, GSA took corrective action on the protest, advising MSI 
that it would fully compete the HCFA Woodlawn requirement as a 
separate procurement.  GSA stated that until a new competition could 
be conducted, "in the interim GSA [would] obtain the required guard 
services for the HCFA building on a month to month basis."  On August 
27, MSI withdrew the HCFA Woodlawn protest.

Since MSI withdrew its protest, GSA has issued three delivery orders 
to Knight--to provide 187 hours of security guard services at the HCFA 
Woodlawn facility on a 30-day basis.  In its current protest, MSI 
contends that the agency is improperly dividing a large purchase into 
small purchases in order to circumvent the requirements for full and 
open competition.

GSA reports that consistent with its promised corrective action, its 
issuance of the three challenged delivery order modifications simply 
reflects the need for interim purchases until the agency is in a 
position to fully compete this requirement.  In this regard, the 
record shows that as soon as the Department of Labor provides GSA with 
the appropriate wage rate determinations for the Woodlawn services, 
the agency will proceed with a fully competitive procurement for this 
site.

We find the challenged modifications to be unobjectionable.  When an 
agency is faced with a critical need while being simultaneously unable 
to proceed with a fully competitive award for that item, it may 
properly use the small purchase procedures as an interim means to 
procure its needs until a fully competitive award is possible.  
Mas-Hamilton Group, Inc., 72 Comp. Gen. 6 (1992), 92-2 CPD  para.  259.  
Here, where the record shows that the agency is using the small 
purchase procedures to make short-term buys until a fully competitive 
award can be completed, we find the interim use of small purchase 
procedures is appropriate.

The protest is denied.

Comptroller General
of the United States

1. On June 27, 1996 MSI requested copies of all modifications issued 
under the Knight contract; on September 25, MSI received copies of the 
modifications.  On October 7, MSI timely filed this protest.

2. The Competition in Contracting Act of 1984 (CICA) authorizes the 
use of simplified procedures that "promote competition to the maximum 
extent practicable" for small purchases of property and services not 
expected to exceed $100,000.  41 U.S.C.  sec.  253(g)(1994); 41 U.S.C.  sec.  
403(11) (1994).  An agency is to promote efficiency and economy in 
small purchase procurements by using simplified procedures in 
soliciting quotations, and is generally considered to have complied 
with the mandate that it "promote competition to the maximum extent 
practicable" when it solicits quotes from three or more qualified 
sources(not exceeding $25,000).
FAR  sec.  13.106-2(a)(4); Arcy Mfg. Co., Inc.; Beard Servs., Inc.; Keys 
Wholesale, Inc.; Craftmaster Hardware Co., Inc., B-261538 et al., Aug. 
14, 1995, 95-2 CPD  para.  283.

3. On December 19, 1996, MSI filed a supplemental protest challenging 
the agency's failure to solicit the protester for the small purchase 
procurement.  Under our Bid Protest Regulations, section 21.2(a)(2), 
61 Fed. Reg. 39039, 39043 (1996) (to be codified at 4 C.F.R.  sec.  
21.2(a)(2)), protests such as this one must be filed within 10 
calendar days from when the protest basis was known.  In its report 
dated November 7, 1996, GSA advised that it had procured services at 
the five non-Baltimore sites using a small purchase procurement among 
three former contractors.  Since the protester waited more than a 
month to challenge the agency's small purchase methods, its 
supplemental protest is untimely.