It could be a vacuum leak between the carb and engine. I had a B&S 16.5hp IC that did the exact same thing you described. I put a thin layer of RTV on both ends of the plastic intake tube between the carb and engine and the surge went away.
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Adam
1964 Model 100 w/ K301 12hp and custom hydraulics
1972 Model 149 turned 129 w/ K301 12hp, triple hydraulics, 66 series clone
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