BNUMBER:  B-279777             
DATE:  July 17, 1998
TITLE: Outdoor Venture Corporation, B-279777, July 17, 1998
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Matter of:Outdoor Venture Corporation

File:B-279777            
        
Date:July 17, 1998

Marc Lamer, Esq., Kostos and Lamer, for the protester. 
Scott Arnold, Esq., and Douglas Manya, Esq., Howrey & Simon, for 
Teledyne Brown Engineering, an intervenor. 
Maria Ventresca, Esq., Defense Logistics Agency, for the agency. 
Scott H. Riback, Esq., and John M. Melody, Esq., Office of the General 
Counsel, GAO, participated in the preparation of the decision.

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; in such 
circumstances, considerations relating to maximizing competition are 
secondary to the agency's mobilization base needs.

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.  Further, to the extent OVC believes TBE's reduced option 
prices indicate that the award prices were too high, we note that an 
agency may properly pay a price premium in awarding a contract for 
mobilization base purposes.  Minowitz Mfg. Co., B-228502, Jan. 4, 
1988, 88-1 CPD  para.  1 at 4.

The decisions cited by OVC are inapplicable here, since they involved 
firms which had competed unsuccessfully for the original award and 
which then protested that they could have offered better option prices 
than those negotiated without competition with the awardee.  Magnavox 
Elec. Sys., Co., B-231795, supra; Varian Assocs., Inc., supra.  This 
was true even in Magnavox, where there was less than full and open 
competition for the initial award.  In that case, the agency had 
conducted a limited competition among industrial mobilization base 
producers, and had made its original award decision, in part, on the 
basis of low price.  Subsequently, the agency modified the awardee's 
contract to acquire additional units at a lower price.  We sustained 
the protest, holding that the additional quantity should have been 
competed, because the record showed that another of the mobilization 
base competitors may have been the low-priced offeror, and therefore 
entitled to the award, had the agency originally awarded a contract 
for the increased quantity.  In the current case, there was no 
competition among industrial mobilization base producers for the 
original award; rather, the agency made award to TBE on a sole-source 
basis--admittedly at a price premium--in order to maintain that firm's 
manufacturing capacity.  Because, as explained above, the sole-source 
justification remained valid at the time the option was exercised, 
nothing in Magnavox or Varian suggests that a competition had to be 
held for the option quantity.

The protest is denied.[1]

Comptroller General
of the United States

1. In its supplemental comments to the agency report, OVC alleged for 
the first time that, collectively, the delivery orders issued to TBE 
are for more units than were contemplated when the agency prepared its 
justification and approval (J&A) to make the sole-source award to TBE.  
This argument is dismissed as untimely.  OVC was provided the agency's 
J&A when it received its copy of the agency report responding to its 
protest.  OVC did not raise this argument until more than 10 days 
after it received that document, as it was required to do under our 
Bid Protest Regulations.  4 C.F.R.  sec.  21.2(a)(2) (1998).