MCI Constructors, Inc.

MCI Constructors, Inc. BNUMBER: B-274347; B-274347.2 DATE: December 3, 1996 TITLE: MCI Constructors, Inc. ********************************************************************** Matter of:MCI Constructors, Inc. File: B-274347; B-274347.2 Date:December 3, 1996 Steven J. Weber, Esq., Watt, Tieder & Hoffar, for the protester. Christopher M. Bellomy, Esq., George N. Brezna, Esq., and Robert M. Roylance, Esq., Department of the Navy, for the agency. Henry J. Gorczycki, Esq., and James A. Spangenberg, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST Where solicitation states that option prices will be evaluated in determining which bid offers the lowest overall price for a construction contract, a bid, which is only low if the option is considered, is not materially unbalanced where the agency reasonably expects to exercise the option. DECISION MCI Constructors, Inc. protests an award to Danis Heavy Construction Company under invitation for bids (IFB) No. N62470-94-B-4124, issued by the Department of the Navy, Naval Facilities Engineering Command, for the wastewater treatment plant upgrade of the French Creek Wastewater Treatment Facilities, Marine Corps Base, Camp Lejeune, North Carolina. MCI contends that Danis's bid should be rejected as unbalanced. We deny the protest in part and dismiss it in part. The existing wastewater treatment facilities at Camp Lejeune do not comply with National Pollution Discharge Elimination System (NPDES) Permit No. NC0063029. Camp Lejeune is currently permitted to operate these facilities under a Special Order of Consent agreement entered into between Camp Lejeune and the North Carolina Environmental Management Commission. Under this agreement, compliance with the NPDES Permit is required by December 31, 1998. The IFB, issued on May 1, 1996, contemplated award of a firm, fixed-price construction contract for phases II and III of the three-phase wastewater treatment plant upgrade project.[1] Phase II of the project covers the construction of a Sludge Treatment System. Phase III of the project covers the construction of a Biological Nutrient Removal (BNR) System. Completion of all three phases of this project is necessary in order to bring Camp Lejeune's wastewater treatment facilities into compliance with the NPDES Permit. The IFB bid schedule contained the following four bid items: "BID ITEM DESCRIPTION AMOUNT "0001A Price for entire work (including the total construction cost for the selected Sludge Treatment System), complete and in accordance with the drawings & specifications, but EXCLUDING BID ITEMS 0001B, 0001C AND 0002. $________ "0001B Price for the present worth of guaranteed total electrical power consumption for the selected BNR System. $________ "0001C Price for the present worth of guaranteed total electrical power consumption for the selected Sludge Treatment System. $________ "0002 OPTION ITEM 0001 Price for all work associated with the selected BNR System (except for associated power consumption covered in Bid Item 0001B), complete and in accordance with the drawings and specifications. $________" Bid item No. 0002 (phase III of the project) was an option item because, when the IFB was issued, funds for the military construction budget had not yet been appropriated. Funds were previously appropriated for phase I in fiscal year 1994, and for phase II in fiscal year 1996. Phase III funding was in the fiscal year 1997 military construction budget submitted to Congress. The IFB required bids on an all-or-none basis for all four bid items. The base contract would cover only bid item No. 0001A, and the government reserved the right to exercise the option for bid item No. 0002 within 300 calendar days after contract award.[2] The IFB incorporated by reference the clause at Federal Acquisition Regulation sec. 52.217-5, Evaluation of Options (July 1990), which states that the government will include the price of options in its evaluation of total price for award purposes. The IFB also provided that the low bid for purposes of award shall be the bid with the lowest total price for all four bid items. Bid opening was held on June 11. The Navy received the following bids: Bid Item No.