Protest alleging that a modification was outside the scope of the contract is sustained. The solicitation sought scopes for small arms. The awardee proposed wire crosshairs for its scope while other offerors proposed more expensive glass crosshairs. After award, however, the agency modified the contract to require the awardee to use glass crosshairs. This modification also required the awardee to redesign the scope. GAO determined that the modification was outside the scope of the contract because it contravened a solicitation provision that explicitly prohibited the redesign of the scope in the event the agency changed crosshairs. GAO further found that this modification was a material change that could not have been anticipated by the offerors and was not permitted under the contract’s changes clause.
The Navy issued a solicitation for squad variable powered scopes for small arms used by Special Operations Forces. The Navy received seven proposals, including proposals from Sig Sauer, Inc. and Leupold Stevens, Inc. Sig Sauer proposed a wire reticle for its scope. The reticle is essentially the crosshairs of the scope—that is, the markings on a sighting device used for measurement reference. Leupold, and every other offeror proposed a glass reticle. Sig Sauer’s wire reticle approach was about half of the price of the other the  offerors’ glass reticles. Thus, the Navy awarded the contract to Sig Sauer.
Several months after award, however, the Navy modified the contract. The modification required Sig Sauer to use a Horus T-8 reticle, a glass reticle made by Horus Vision Technologies. This modification increased the contract price by 77 percent. Leupold filed a GAO protest, alleging that the modification was outside the scope of the contract and should have been the subject of an open competition.
The Navy and Sig Sauer acknowledged that the change in the reticle would require changes to scope design. Nevertheless, the Navy argued that the modification was not outside the scope of the contract because the solicitation had a Future Reticle section that anticipated modifications to the reticle. But GAO noted that the section following the Future Reticle section explicitly prohibited changes in design of the scope when changing reticles. GAO reasoned that because the modification required a change in scope design that was expressly prohibited by the solicitation, the modification was outside the scope of the contract.
The Navy contended that even if the solicitation prohibited a change in design, offerors reasonably anticipated that a reticle change would result in a design change. GAO, however, declined to look at offerors’ proposals to deduce whether they had anticipated a change in design. What’s more, the record did not support the Navy’s argument. As a matter of fact, Sig Sauer’s proposal stated that it could change the reticle without changing design of the scope.
The Navy further argued that modification was permitted by the contract’s changes clause, codified at FAR 52.243-1. But that FAR provision states that changes must within the scope of the contract, so GAO read the changes clause as subject to other contract terms—like the prohibition on design changes—that address scope. What’s more, under principles of contract interpretation, a more specific clause takes precedence over a more general clause. The changes clause was more general then the design limitation clause. Accordingly, the design limitation clause governed.
Sig Sauer asserted that even if the change in reticle required design changes, the design changes were not material. GAO disagreed, noting the change in reticles resulted in a huge—77 percent—cost increase.
Finally, the Navy argued that even if the modification was outside the scope, Leupold had not been prejudiced. The Navy contended that if even if the solicitation had required a glass reticle, the outcome of the competition would not have changed. But GAO noted that had Leupold known that the Navy would have allowed a change in reticle illumination, it could have proposed a wire reticle like Sig Sauer and substantially reduced its price and improved its competitive position. Leupold had been prejudiced.
Leupold is represented by Alix Town of Oles Morrison Rinker & Baker. The intervenor, Sig Sauer, is represented by W. Jay DeVecchio, Kevin P. Mullen, and Allisandra D. Young of Morrison & Foerster LLP. The agency is represented by Randall Kemplin of the U.S. Navy. GAO attorneys Stephanie B. Magnell and Amy B. Pereira participated in the preparation of the decision.
