Charles J. Merlo, Inc., B-277384, July 31, 1997

B-277384 Jul 31, 1997 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights DIGEST Where the cognizant funding official advised the contracting officer that funding necessary to award the solicitation's option quantities was expected to be included in future appropriations legislation. Contracting officer properly determined that there was no basis to exclude option quantity pricing from the bid evaluation. The IFB was issued by the Army Corps of Engineers' Pittsburgh District on April 28. Unless the government determined in accordance with FAR Sec. 17.206(b) that evaluation of option quantities was not in its best interests. The IFB also advised bidders that "[o]nly the basic contract items . . . will be awarded initially" since the operation and maintenance (O&M) funding necessary to award the option items was not yet available. View Decision Matter of: Charles J. Merlo, Inc. File: B-277384 Date: July 31, 1997 DIGEST Attorneys DECISION Charles J. Merlo, Inc. protests the proposed award of a contract to Mosites Construction Company under invitation for bids (IFB) No. DACW59- 97-B-0009, issued by the Army Corps of Engineers for rehabilitation of the Stoneycreek River in Johnstown, Pennsylvania. Merlo contends that the Army performed an improper pricing evaluation. We deny the protest. The IFB was issued by the Army Corps of Engineers' Pittsburgh District on April 28, 1997, as part of the Johnstown Channel Improvement flood control/rehabilitation project, and contemplated the award of a fixed- price contract for 42 "Basic Contract Items" and 22 "Awardable Option Items" to be performed over a 2-year period. Of significance to this protest, the IFB set forth the standard "Evaluation of Options" clause, Federal Acquisition Regulation (FAR) Sec. 52.217-5, which advised bidders that the government would "evaluate offers for award purposes by adding the total price for all options to the total price for the basic" items, unless the government determined in accordance with FAR Sec. 17.206(b) that evaluation of option quantities was not in its best interests. The IFB also advised bidders that "[o]nly the basic contract items . . . will be awarded initially" since the operation and maintenance (O&M) funding necessary to award the option items was not yet available, but was "expected" to be appropriated by Congress in "future fiscal years." At the June 18 bid opening, Merlo's price of $4,732,303 was the lowest of the eight bids received for the basic items; however, Mosites' total bid price of $6,162,905 for both the basic and option items was the lowest overall. [1] Shortly after bid opening, the contracting officer learned that Merlo intended to file a bid protest if the agency failed to invoke the "best interests" provision set forth in FAR Sec. 17.206(b). That regulation provides, in relevant part: The contracting officer need not evaluate offers for any option quantities when it is determined that evaluation would not be in the best interests of the Government . . . . An example of a circumstance that may support a determination not to evaluate offers for option quantities is when there is a reasonable certainty that funds will be unavailable to permit exercise of the option. On June 24 and 25, the contracting officer met with several Corps of Engineers officials from the Pittsburgh District to ascertain whether funding for the option items was available. The Assistant Chief, Operations and Readiness Division, of the Pittsburgh District (Assistant Chief)--who is the manager of the Johnstown Channel Improvement project's O&M budget, the source for any option quantity funding--advised the contracting officer that he expected Congress to provide funds for the IFB's optional contract items in both the fiscal year (FY) 1998 and FY 1999 appropriations legislation, as requested by the Army. The Assistant Chief also advised the contracting officer that in the event the option quantity funding was not included in either the FY 1998 or FY 1999 appropriations legislation, or the amount appropriated was insufficient to cover the full option quantity award amount, he would allocate other O&M funds to cover award of the option items. Based on these assurances, the contracting officer decided that funding for the solicitation's option quantities was reasonably certain, and, consequently, the bid evaluation should include the option item pricing. On June 30, after learning that the Army intended to include option pricing in the bid evaluation--which rendered Mosites the apparent low bidder--Merlo filed this protest. Merlo contends that "it is an abuse of the contracting officer's authority not to make a determination under FAR Sec. 17.206(b)" to exclude option pricing from the bid evaluation because there is no current funding for the option quantities.