Yeah it is the kidneys and liver but I am sure acid does cause some loss as well. That might be the reason for the 80% number. Might be able to increase it.
No, the decreased bioavailability is due to hepatic degradation. You see, every time you eat something and the nutrients are absorbed by the GI it is transferred to the associated portal veins. These portal veins direct the new material (which includes drugs) directly to the liver prior to entering the normal circulation. Here the liver is able to "filter out" (for lack of a better term) toxins, drugs, vitamins, etc. This is good if you have harmful things, but bad if you're trying to get a drug into the normal circulation. Once the blood has been "filtered" through the liver it is allowed to enter the normal circulation.
Other types of drug administration, or "parenteral" administration (not oral) are meant to bypass this portal system. These include, but aren't limited to, intravenous, IM injection, Sub-q injection, transdermal, intranasal, and sublinqual administration.