B-203589.3,L/M, FEB 9, 1982

B-203589.3,L/M: Feb 9, 1982

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IS WITHOUT MERIT SINCE THIS CRITICISM REFLECTS PROTESTER'S MISUNDERSTANDING OF ACTUAL BASES FOR GAO DECISION. IS ESSENTIALLY A REQUEST FOR YOUR AID IN OBTAINING A REVISION OF THE DEFENSE ACQUISITION REGULATION (DAR) SO THAT. ANY BID THAT FAILS TO COMPLY WITH A SOLICITATION'S "SURGE OPTION" PROVISION WILL BE REJECTED AS NONRESPONSIVE. COPIES OF WHICH ARE ENCLOSED. IN THOSE DECISIONS WE HAVE EXPLAINED IN CONSIDERABLE DETAIL WHY WE CONCLUDE THAT THE FAILURE OF THE TWO LOWEST BIDDERS TO BID ON THE SURGE OPTION PROVISIONS DID NOT RENDER THEIR BIDS NONRESPONSIVE. THIS IS NOT AN ACCURATE STATEMENT OF WHAT THE DECISION HOLDS. WE STATED THAT THE GENERAL REGULATORY POLICY IS THAT SOLICITATIONS CONTAINING OPTION PROVISIONS SHALL STATE THAT EVALUATION WILL BE ON THE BASIS OF THE QUANTITY TO BE AWARDED.

B-203589.3,L/M, FEB 9, 1982

DIGEST: PROTESTER'S CRITICISM OF GAO'S INITIAL DECISION AND RECONSIDERATION, WHICH DENIED PROTEST ON GROUNDS THAT FAILURE OF TWO LOWEST BIDDERS TO COMPLY WITH IFB'S SURGE OPTION PROVISION DID NOT RENDER THEIR BIDS NONRESPONSIVE, IS WITHOUT MERIT SINCE THIS CRITICISM REFLECTS PROTESTER'S MISUNDERSTANDING OF ACTUAL BASES FOR GAO DECISION.

LAWTON CHILES, UNITED STATES SENATOR:

WE REFER TO YOUR LETTER DATED DECEMBER 4, 1981, AND THE ENCLOSED CORRESPONDENCE FROM POSITIVE CONSULTANTS, INC. (PCI), ACTING IN BEHALF OF ITS PRINCIPAL, AMS MANUFACTURING, INC.

PCI'S LETTER TO YOU DATED NOVEMBER 17, 1981, IS ESSENTIALLY A REQUEST FOR YOUR AID IN OBTAINING A REVISION OF THE DEFENSE ACQUISITION REGULATION (DAR) SO THAT, IN THE FUTURE, ANY BID THAT FAILS TO COMPLY WITH A SOLICITATION'S "SURGE OPTION" PROVISION WILL BE REJECTED AS NONRESPONSIVE. HOWEVER, IN MAKING THIS POINT, PCI ALSO CRITICIZES OUR DECISIONS IN THE MATTER OF AMS MANUFACTURING, INC., B-203589, SEPTEMBER 2, 1981, 81-2 CPD 195, AND AMS MANUFACTURING, INC. - RECONSIDERATION, B-203589.2, NOVEMBER 2, 1981, 81-2 CPD 371, COPIES OF WHICH ARE ENCLOSED.

IN ITS LETTER OF NOVEMBER 17, PCI STATES THAT IT "APPEARS GAO DID NOT STUDY THE BID AND THE 'SURGE OPTION' PROVISION CAREFULLY." A FAIR READING OF OUR TWO DECISIONS CLEARLY REFUTES THIS ASSERTION. IN THOSE DECISIONS WE HAVE EXPLAINED IN CONSIDERABLE DETAIL WHY WE CONCLUDE THAT THE FAILURE OF THE TWO LOWEST BIDDERS TO BID ON THE SURGE OPTION PROVISIONS DID NOT RENDER THEIR BIDS NONRESPONSIVE. PCI OBVIOUSLY DISAGREES WITH OUR FINDINGS; BUT, AS WE STATED IN AMS MANUFACTURING, INC. - RECONSIDERATION, NO ERROR OF FACT OR LAW HAS BEEN SHOWN WHICH WOULD REQUIRE US TO MODIFY OUR PRIOR DECISION.

PCI ALSO STATES THAT WE HELD IN AMS MANUFACTURING, INC. - RECONSIDERATION, THAT EVEN IF A SOLICITATION CONTAINED A CLAUSE WARNING BIDDERS THAT FAILURE TO COMPLETE THE SURGE OPTION PROVISION WOULD RENDER A BID NONRESPONSIVE, THAT CLAUSE WOULD BE MEANINGLESS. THIS IS NOT AN ACCURATE STATEMENT OF WHAT THE DECISION HOLDS. WE STATED THAT THE GENERAL REGULATORY POLICY IS THAT SOLICITATIONS CONTAINING OPTION PROVISIONS SHALL STATE THAT EVALUATION WILL BE ON THE BASIS OF THE QUANTITY TO BE AWARDED, EXCLUSIVE OF THE OPTION QUANTITY. DAR SEC. 1 1504(A) (1976 ED.). IF THE CONTRACTING AGENCY INTENDS TO EVALUATE AN OPTION, THE SOLICITATION MUST SPECIFICALLY PROVIDE FOR SUCH EVALUATION BY INCLUSION OF A REQUIRED CLAUSE. DAR SECS. 1-1504(B), (C) AND (D). WE NOTED THAT THIS REQUIRED CLAUSE WAS NOT PART OF THE SOLICITATION AMS WAS PROTESTING. WE ALSO STATED THAT, IN ANY EVENT, EVEN IF AN INVITATION FOR BIDS CONTAINS A CLAUSE WHICH SPECIFICALLY WARNS BIDDERS THAT THEIR BIDS WILL BE REJECTED IF THE BIDS DO NOT INCLUDE OPTION PRICES, THIS CLAUSE ALONE DOES NOT PERMIT REJECTION OF A BID WHICH HAS FAILED TO INCLUDE OPTION PRICES. FOR SUCH A BID TO BE REJECTED, THE SOLICITATION MUST ALSO PROVIDE THAT OPTION PRICES WILL BE EVALUATED OR SPECIFY THAT OPTION PRICES MAY NOT EXCEED A PARTICULAR CEILING. SEE 51 COMP.GEN. 528 (1972).

PCI ALSO CONTENDS THAT OUR DECISIONS ERRONEOUSLY STATED THAT THE SURGE OPTION PROVISION CONTAINED NO PRICE CEILING. IN FACT, WE SAID THAT THE "OPTION FOR INCREASED QUANTITY" CLAUSE CONTAINED NO PRICE CEILING REQUIREMENT.

PCI'S FINAL ARGUMENT IS THAT WHILE WE CITE DAR SEC. 1-1501 IN AMS MANUFACTURING, INC. - RECONSIDERATION, WE "COMPLETELY IGNORED THE MEANING OF DAR 1-1502." WE CITED DAR SEC. 1-1501 BECAUSE IT DEFINES WHAT AN "OPTION" IS, AND WE CONCLUDED THAT THE SURGE OPTION FALLS WITHIN THIS DEFINITION. DAR SEC. 1-1502 EXPLAINS WHEN AND HOW OPTION CLAUSES SHOULD BE USED. WE ARE UNCERTAIN WHAT PCI MEANS IN SAYING THAT WE IGNORED THE MEANING OF DAR SEC. 1-1502 AND, WITHOUT MORE, WE CANNOT COMMENT FURTHER. IN OUR OPINION, THE TWO DECISIONS IN QUESTION ARE CONSISTENT WITH ALL THE APPLICABLE REGULATIONS. MOREOVER, WE ARE UNAWARE OF ANY NECESSITY FOR REVISING THE REGULATIONS.

WE TRUST THAT THE FOREGOING WILL AID YOU IN RESPONDING TO PCI'S INQUIRY; AND, AS REQUESTED, WE ENCLOSE AN ADDITIONAL COPY OF THIS RESPONSE AND THE ENCLOSURE TO YOUR LETTER.