Harris Corporation

Harris Corporation BNUMBER: B-274566; B-274566.2 DATE: November 27, 1996 TITLE: Harris Corporation ********************************************************************** Matter of:Harris Corporation File: B-274566; B-274566.2 Date:November 27, 1996 Dorn C. McGrath III, Esq., and Richard L. Moorhouse, Esq., Holland & Knight, for the protester. Kenneth S. Kramer, Esq., and Nancy R. Wagner, Esq., Fried, Frank, Harris, Shriver & Jacobson, for Raytheon Electronic Systems, Raytheon Company, an intervenor. Vera Meza, Esq., and Walter Harbort, Jr., Esq., Department of the Army, for the agency. Linda S. Lebowitz, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST Where the solicitation required offerors to propose fixed prices and provided that options, if exercised, would not necessarily be exercised in a manner to guarantee continuous production, and where the protester states in its best and final offer, after discussions regarding these requirements, that it reserved the right to recover additional costs associated with breaks in production in the option periods, the protester's proposal is properly rejected as technically unacceptable since the firm took exception to the solicitation's material fixed-price and option requirements. DECISION Harris Corporation protests the award of a contract to Raytheon Electronic Systems, Raytheon Company, under request for proposals (RFP) No. DAAB07-96-R-A509, issued by the Department of the Army for the fabrication, integration, test, and delivery of Tri-Band Tactical Terminals (T3(H)s) for battlefield satellite terminal communications. Harris challenges the rejection of its proposal as technically unacceptable. We deny the protests. The RFP contemplated the award of a firm, fixed-price contract for the T3(H) units for a basic contract period and five 24-month option periods to the offeror whose proposal represented the best value to the government, technical evaluation factors, price, and performance risk considered.[1] As relevant to these protests, the RFP included clause H-4, captioned "Option for Increased Quantity--Separately Priced Line Item." Paragraph (e) of this clause provides that the "[e]valuation of options will not obligate the Government to exercise the option(s)," and paragraph (g) provides that: "[t]he Government may exercise subsequent options if prior option years are not exercised (i.e. [(sic)] if the Government does not exercise Option I, the Government still has the right to exercise Option II). Exercise of subsequent years is not dependent upon exercise of the prior year option." In its initial proposal, submitted in April 1996, under a section captioned "Other Conditions and Assumptions," Harris addressed clause H-4, stating that: "The prices for the Option Period hardware CLINS/SLINS do not contain startup or non-recurring cost[s] provided for in the basic period, but are dependent upon steady work flowing through the T3(H) Focused Factories. Consequently, Harris reserves the right to recover cost[s] associated with breaks in the T3(H) production flow associated with loss of learning, idle resources and personnel disruptions." (Emphasis added.) By letter dated June 24, the contracting officer notified Harris that the agency had completed its initial evaluation. The contracting officer enclosed with this letter, among other things, items for negotiation (IFN) and responses to Harris's terms and conditions. With regard to the above quoted condition in Harris's initial proposal, the contracting officer stated that: "The Government does not warrant that options will be exercised so as to facilitate a steady production flow. As stated in RFP Section H-4, Option for Increased Quantity--Separately Priced Line Item, option quantities are not guaranteed and the 'exercise of subsequent [option] years is not dependent upon exercise of the prior year option.'" (Emphasis added.) The contracting officer also enclosed with her June 24 letter a model contract for Harris, explaining that "if [Harris] is the successful offeror, [Harris] will be required to sign this document. Therefore, please review the model contract and provide comments as necessary with your IFN responses." Harris's model contract contained RFP clause H-4, "Option for Increased Quantity--Separately Priced Line Item," including paragraphs (e) and (g) as quoted above.[2] In addition, in response to a previous question posed by Harris concerning the submission of alternate proposals, the contracting officer responded that "alternate proposals are acceptable with the exception of: a) an alternate proposal that changes the contract type." The contracting officer afforded Harris an opportunity to revise its proposal by submitting proposal revision change pages.