B-175731, OCT 26, 1972

B-175731, OCT 26, 1972

BID PROTEST - OPTION CLAUSE - NONEXERCISE - UNREASONABLE PRICE DECISION DENYING THE PROTEST OF A.C.E.S., INC., AGAINST AWARD OF A CONTRACT FOR NECESSARY SERVICES AND MATERIALS TO REPAIR UH-1 AND AH-1G TAILBOOMS UNDER AN IFB ISSUED BY NAVAL AIR STATION, CORPUS CHRISTI, TEX. WHERE IT IS INDICATED THAT THE PRICE AT WHICH THE INCUMBENT CONTRACTOR IS PERFORMING MIGHT NOT BE REASONABLE, THE CONTRACTING OFFICER MAY NOT PROPERLY EXERCISE THE OPTION CLAUSE OF THE CONTRACT, BUT MUST SOLICIT COMPETITIVE BIDS AND AWARD A CONTRACT TO THE LOWEST RESPONSIBLE BIDDER, PRICE AND OTHER FACTORS CONSIDERED, IF THE BIDS RECEIVED OFFER MORE REASONABLE PRICES THAN THE OPTION PRICES. B 170913, NOVEMBER 17, 1970. ON THIS RECORD, IT WOULD APPEAR THAT THE EXERCISE OF THE OPTION WAS PRECLUDED, AND THAT AWARD WAS REQUIRED TO BE MADE TO THE LOW RESPONSIBLE BIDDER UNDER THE IFB.

TO A.C.E.S., INC.:

REFERENCE IS MADE TO YOUR TELEGRAMS OF APRIL 18 AND 21, 1972, AND YOUR LETTER OF APRIL 18, 1972, PROTESTING THE AWARD OF A CONTRACT TO ANY OTHER FIRM PURSUANT TO INVITATION FOR BIDS N00216-72-B-0055, ISSUED DECEMBER 16, 1971, BY THE SUPPLY DEPARTMENT, PURCHASE DIVISION, NAVAL AIR STATION, CORPUS CHRISTI, TEXAS.

THE SUBJECT IFB SOLICITED BIDS FOR THE NECESSARY SERVICES AND MATERIAL TO REPAIR UH-1 AND AH-1G TAILBOOMS FOR THE PERIOD OF ONE YEAR FROM THE DATE OF AWARD. THE OPENING OF BIDS ON JANUARY 14, 1972, REVEALED THE SUBMISSION OF BIDS BY NINE FIRMS, WITH YOUR BID BEING THE FOURTH LOWEST.

THE RECORD INDICATES THAT THE LOW BIDDER WAS DETERMINED NONRESPONSIBLE UPON THE COMPLETION OF A PREAWARD SURVEY. IT IS REPORTED THAT UPON CONSIDERATION OF THE MATTER BY THE SMALL BUSINESS ADMINISTRATION (SBA), THAT AGENCY DECLINED TO ISSUE A CERTIFICATE OF COMPETENCY (COC). FOLLOWING A CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY OF THE SECOND LOW BIDDER, AERO TECH SERVICES, INC. (AERO TECH), THAT FIRM REQUESTED THAT THE SBA ISSUE A COC. THE NECESSARY DOCUMENTS WERE FORWARDED TO THE SBA, AND A COC WAS ISSUED APRIL 18, 1972.

ON APRIL 21, 1972, IT WAS REQUESTED THAT AN IMMEDIATE AWARD BE MADE PURSUANT TO A DETERMINATION THAT THE IMMEDIATE REPAIR OF TAILBOOMS WAS ESSENTIAL TO SUPPORT SOUTHEAST ASIA OPERATIONS, AND THAT A PROMPT AWARD WAS RENDERED IMPERATIVE BY THE DELAYS INCURRED BY TWO PREAWARD SURVEYS, TWO COC REQUESTS, AND THE PROTEST FILED BY YOUR FIRM. THEREAFTER A CONTRACT WAS EXECUTED WITH AERO TECH SERVICES, INC., ON APRIL 24, 1972, AS IS PERMITTED BY ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2 407.8(B)(3), NOTWITHSTANDING THE FACT THAT A PROTEST HAS NOT YET BEEN RESOLVED.

YOU STATE THAT YOU WERE THE INCUMBENT CONTRACTOR ON THE PREDECESSOR CONTRACT FOR THESE SERVICES (N00216-71-D-0197); THAT YOU HAD BEEN PERFORMING SINCE JANUARY 4, 1972, ON FOUR 30-DAY EXTENSIONS WITHOUT ANY MENTION OF INCREASE IN QUANTITY; BUT YOU WERE NOT REQUESTED TO EXTEND THAT CONTRACT FOR ANOTHER YEAR DUE TO A PURPORTED INCREASE IN QUANTITY. YOU REQUEST THAT YOUR CONTRACT N00216-71-D-0197 BE EXTENDED FOR A TWELVE (12) MONTH PERIOD AS PROVIDED THEREIN.

THAT CONTRACT CONTAINED AN OPTION PROVISION ON PAGE 25 WHICH STATED THAT THE CONTRACT WAS RENEWABLE AT THE OPTION OF THE GOVERNMENT, PROVIDING THAT THE CONTRACTING OFFICER SHALL HAVE GIVEN PRELIMINARY NOTICE OF THE GOVERNMENT'S INTENTION TO RENEW AT LEAST 60 DAYS PRIOR TO THE EXPIRATION OF THE CONTRACT. THE RECORD INDICATES THAT YOU WERE ADVISED BY LETTER OF APRIL 19, 1972, THAT IT IS THE PREROGATIVE OF THE GOVERNMENT TO EXERCISE OPTIONS AFTER DUE CONSIDERATION OF THE ASPR, AND THAT THE DECISION OF THE CONTRACTING OFFICER NOT TO EXERCISE THE REFERENCED OPTION WAS MADE IN ACCORDANCE WITH ASPR 1-1505.

ASPR 1-1505(C)(III) PROVIDES THAT OPTIONS SHOULD BE EXERCISED ONLY IF IT IS DETERMINED THAT SUCH A COURSE IS MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. INSOFAR AS PRICE IS CONCERNED, ASPR 1 -1505(D)(2) PROVIDES THAT THE OPTION SHOULD BE EXERCISED ONLY AFTER AN INFORMAL INVESTIGATION OF PRICES, OR OTHER EXAMINATION OF THE MARKET, INDICATES CLEARLY THAT A PRICE BETTER THAN THAT OFFERED BY THE OPTION CANNOT BE OBTAINED.

THE RECORD INDICATES THAT THE DECISION NOT TO EXERCISE THE OPTION WAS BASED UPON AN INFORMAL TESTING OF THE MARKET, WHICH INDICATED THAT THE INCREASED QUANTITIES AND CHANGED SPECIFICATIONS OF THE SUBJECT IFB WOULD RESULT IN A DECREASE IN COSTS, WHEN COMPARED WITH THE PRICES SET FORTH IN CONTRACT N00216-71-D-0197. THE RECORD FURTHER INDICATES THAT THE FOUR EXTENSIONS OF THAT CONTRACT SINCE JANUARY 1972 HAVE RESULTED IN AN ESTIMATED EXCESS COST OF $19,079.66 PER MONTH.

IT IS NOTED THAT THE UNIT PRICES WHICH YOU BID FOR ITEMS 0001 AND 0003 ON IFB N00216-72-B-0055 WERE IDENTICAL WITH THOSE IN YOUR CONTRACT N00216-71- D-0197, SPECIFICALLY $963.00 PER UNIT FOR EACH ITEM. IT IS ALSO NOTED THAT AERO TECH'S UNIT PRICES UNDER THE IFB WERE $817.00 AND $856.00, RESPECTIVELY, FOR THE SAME ITEMS.

OUR OFFICE HAS PREVIOUSLY STATED THAT WHERE IT IS INDICATED THAT THE PRICE AT WHICH THE INCUMBENT CONTRACTOR IS PERFORMING MIGHT NOT BE REASONABLE, THE CONTRACTING OFFICER MAY NOT PROPERLY EXERCISE THE OPTION, BUT IS REQUIRED TO SOLICIT COMPETITIVE BIDS AND TO AWARD A CONTRACT TO THE LOWEST RESPONSIBLE BIDDER, PRICE AND OTHER FACTORS CONSIDERED, IF THE BIDS RECEIVED OFFER MORE REASONABLE PRICES THAN THE OPTION PRICES. B-170913, NOVEMBER 17, 1970.

SINCE THE REQUIREMENT IN THE INSTANT CASE WAS, IN FACT, SUBMITTED TO THE TEST OF COMPETITIVE BIDDING AND THE INVITATION PRODUCED A BETTER PRICE THAN THAT OFFERED BY THE OPTION, IT WOULD APPEAR THAT EXERCISE OF THE OPTION WAS PRECLUDED AND THAT AN AWARD WAS REQUIRED TO BE MADE TO THE LOW RESPONSIBLE BIDDER UNDER THE INVITATION. 49 COMP. GEN. 335, 343 (1969).

ACCORDINGLY, YOUR PROTEST MUST BE DENIED.