B-176356, NOV 8, 1972

B-176356, NOV 8, 1972

BID PROTEST - OPTION CLAUSE - INCREASED UNIT PRICE DECISION DENYING THE PROTEST OF GULL AIRBORNE INSTRUMENTS, INC., AGAINST REJECTION OF ITS APPARENT LOW BID AND SUBSEQUENT AWARD OF A CONTRACT TO TECHNICAL SERVICES LABORATORY UNDER AN IFB ISSUED BY THE NAVAL AIR ENGINEERING CENTER, PHILADELPHIA, PA. WHERE A BIDDER INCLUDED IN HIS BID AN OPTION PRICE WHICH EXCEEDED ITS BASIC UNIT PRICE ALTHOUGH BID EVALUATION WAS TO BE MADE ON THE BASIS OF BASIC PRICES ALONE, THE CONTRACTING OFFICER SHOULD EITHER GIVE THE BIDDER AN OPPORTUNITY TO CURE THE BID DEVIATION OR WAIVE THE SINCE IT WASTE THE ADVANTAGE OF THE GOVERNMENT AND NOT PREJUDICIAL TO OTHER BIDDERS AS IT WOULD NOT HAVE AFFECTED THEIR RELATIVE STANDING, 44 COMP. GEN. 581 (1965). HOWEVER, IN LIGHT OF THE ADVANCED STATE OF PERFORMANCE UNDER THE CONTRACT AWARDED, IT WOULD NOT BE IN THE GOVERNMENT'S INTEREST TO DIRECT CANCELLATION.

TO GULL AIRBORNE INSTRUMENTS, INCORPORATED:

FURTHER REFERENCE IS MADE TO YOUR LETTERS OF JUNE 6 AND 23, 1972, PROTESTING AGAINST REJECTION OF YOUR APPARENT LOW BID UNDER INVITATION FOR BIDS NO. N00156-72-B-0364, ISSUED BY THE NAVAL AIR ENGINEERING CENTER AT PHILADELPHIA, PENNSYLVANIA, ON APRIL 4, 1972, AND THE SUBSEQUENT AWARD OF THE CONTRACT TO TECHNICAL SERVICES LABORATORY (TSL) ON JUNE 5, 1972.

GULL SUBMITTED THE LOWEST BID FOR THE BASIC QUANTITY OF THE THREE BIDS RECEIVED ON OR BY THE BID OPENING DATE OF MAY 4, 1972. HOWEVER, IN CONNECTION WITH THE OPTION QUANTITIES GULL SUBMITTED WITH ITS BID A LETTER DATED MAY 2, 1972, WHICH STATED INTER ALIA:

"PAGE 16 - OPTION FOR INCREASED QUANTITY

"THIS OPTION IS ACCEPTABLE AT THE QUOTED UNIT PRICE OF $7,200.00, IF ENTERED AT TIME OF AWARD. THE APPLICABLE UNIT PRICE, FROM DAY AFTER DATE OF AWARD, THROUGH DAY NINETY (90) AFTER DATE OF AWARD, IS $8,000.00."

THE OPTION FOR INCREASED QUANTITY CLAUSE ON PAGE 16 OF THE IFB AND ITS AMENDMENT STATED:

"8750 OPTION FOR INCREASED QUANTITY (JAN. 1961)

"THE GOVERNMENT MAY INCREASE THE QUANTITY OF SUPPLIES CALLED FOR HEREIN BY THE AMOUNT STATED IN THE SCHEDULE AND AT THE UNIT PRICE SPECIFIED THEREIN. THE CONTRACTING OFFICER MAY EXERCISE THIS OPTION, AT ANY TIME WITHIN THE PERIOD SPECIFIED IN THE SCHEDULE, BY GIVING WRITTEN NOTICE TO THE CONTRACTOR. DELIVERY OF THE ITEMS ADDED BY THE EXERCISE OF THIS OPTION SHALL CONTINUE IMMEDIATELY AFTER, AND AT THE SAME RATE AS, DELIVERY OF LIKE ITEMS CALLED FOR UNDER THIS CONTRACT UNLESS THE PARTIES OTHERWISE AGREE.

"PURSUANT TO THE ABOVE CLAUSE ENTITLED 'OPTION FOR INCREASED QUANTITY (JAN. 1961)' THE GOVERNMENT RESERVES THE RIGHT TO INCREASE THE QUANTITY OF SUPPLIES CALLED FOR HEREIN BY AN AMOUNT UP TO 50%. THE GOVERNMENT RESERVES THE RIGHT TO EXERCISE THIS OPTION EITHER AT TIME OF AWARD OR WITHIN NINETY (90) DAYS THEREAFTER."

THE CONTRACTING OFFICER DETERMINED THAT THE QUALIFYING STATEMENT OF THE AFOREMENTIONED LETTER MADE GULL'S BID NONRESPONSIVE TO THE TERMS AND CONDITIONS OF THE IFB. HE REASONED THAT GULL'S SPECIFIC EXCEPTION TO THE OPTION CLAUSE WOULD DEFEAT THE PURPOSE OF THAT CLAUSE BY FORCING THE GOVERNMENT TO BUY OPTION UNITS AFTER AWARD AT PRICES ABOVE THE LOWER BASIC QUANTITY UNIT PRICE. FURTHERMORE, HE CONCLUDED THAT THE BID QUALIFICATION OF AN ADDITIONAL $800 PER OPTION UNIT AFTER AWARD WAS SUCH A SIGNIFICANT DEVIATION THAT IT COULD NOT BE DISREGARDED AS A MINOR INFORMALITY UNDER ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2 405.

IN 44 COMP. GEN. 581 (1965), WE CONSIDERED A CASE SIMILAR IN MANY RESPECTS TO THE PRESENT SITUATION. IN THAT CASE BIDDERS WERE ALSO REQUIRED BY THE INVITATION TO QUOTE OPTION PRICES NOT TO EXCEED THEIR BASIC UNIT PRICES, AND THE BID EVALUATION WAS TO BE MADE ON THE BASIS OF BASIC PRICES ONLY. THERE ALSO, THE LOW BIDDER ON THE BASIC QUANTITY QUOTED HIGHER OPTION PRICES, CONTRARY TO THE INVITATION REQUIREMENT. UNDER SUCH CIRCUMSTANCES WE HAD NO OBJECTION TO PERMITTING THE LOW BIDDER TO REDUCE ITS OPTION PRICES TO COINCIDE WITH ITS BASIC PRICES FOR PURPOSE OF AWARD, SINCE THE OTHER BIDDERS WERE NOT UNFAIRLY PREJUDICED THEREBY. WE POINTED OUT THAT THE PURPOSE FOR LIMITING THE OPTION PRICE TO THE BASIC UNIT PRICES WAS TO INSURE MINIMUM COSTS TO THE GOVERNMENT SHOULD THE OPTION BE EXERCISED IN WHOLE OR IN PART. THERE, AS HERE, AWARD TO THE LOW BIDDER WOULD OBVIOUSLY RESULT IN THE LOWEST COST TO THE GOVERNMENT WHETHER OR NOT THE OPTION WAS EXERCISED. WE NOTED ALSO THAT BECAUSE THE LOW BID AS SUBMITTED OFFERED THE LOWEST COST TO THE GOVERNMENT IN ANY CASE, ACCEPTANCE OF THAT BID COULD NOT BE REGARDED AS PREJUDICIAL TO THE OTHER BIDDERS.

APPLYING THE STANDARDS OF THE CITED CASE TO THE INSTANT CASE, WE MUST CONCLUDE THAT THE CONTRACTING OFFICER SHOULD HAVE EITHER GIVEN YOU AN OPPORTUNITY TO CURE THE DEVIATION IN YOUR BID OR SHOULD HAVE WAIVED THE DEVIATION SINCE IT WAS TO THE ADVANTAGE OF THE GOVERNMENT AND NOT PREJUDICIAL TO THE OTHER BIDDERS AS IT WOULD NOT HAVE AFFECTED THEIR RELATIVE STANDING. SEE ASPR 2-405. HOWEVER, IN VIEW OF THE ADVANCED STATE OF PERFORMANCE UNDER THE CONTRACT AWARDED WE DO NOT BELIEVE IT WOULD BE IN THE GOVERNMENT'S INTEREST TO DIRECT CANCELLATION. IN THIS CONNECTION, WE WERE ADVISED THAT AS OF AUGUST 7, 1972, THE FIRST ARTICLE WAS 75 PERCENT COMPLETED AND MORE THAN $12,000, IN COSTS HAD BEEN INCURRED. IN THESE CIRCUMSTANCES, THE COST OF TERMINATION WOULD FAR EXCEED ANY SAVINGS RESULTING FROM YOUR LOWER BID. HOWEVER, BY LETTER OF TODAY WE ARE ADVISING THE SECRETARY OF THE NAVY OF THE FAILURE TO GIVE PROPER CONSIDERATION TO YOUR BID TO PREVENT A RECURRENCE IN FUTURE PROCUREMENTS.

WITH RESPECT TO YOUR CONTENTION THAT NAVY PROCUREMENT PERSONNEL WERE AWARE OF YOUR INTENTION TO FILE A PROTEST THREE DAYS BEFORE THE JUNE 5, 1972 AWARD, THE RECORD INDICATES THAT THE AWARD WAS MADE PRIOR TO THE ACTUAL RECEIPT OF YOUR PROTEST AND THAT THE PROMPTNESS OF AWARD WAS BASED UPON THE CRITICAL NEED FOR THE EQUIPMENT.