B-174575, FEB 23, 1972, 51 COMP GEN 528

B-174575, FEB 23, 1972, 51 COMP GEN 528

BIDS - EVALUATION - OPTIONS - PRICE OMISSION A LOW BID THAT FAILED TO QUOTE A UNIT PRICE ON OPTION ITEMS UNDER AN INVITATION FOR RADAR TRANSPONDERS THAT STATED OFFERS WOULD BE EVALUATED "EXCLUSIVE OF THE OPTION QUANTITY" IS NOT A NONRESPONSIVE BID. IF THE IFB HAD SPECIFIED THAT OPTION PRICES MAY NOT EXCEED THE BASIC BID PRICES OR ESTABLISHED SOME OTHER STANDARD FOR OPTION PRICES, THE GOVERNMENT WOULD BE DEPRIVED OF A VALUABLE BENEFIT IF THE OPTION COULD NOT BE EXERCISED, OR IF THE GOVERNMENT INTNDED TO EXERCISE THE OPTION, OR A PORTION OF IT, AT THE TIME OF AWARD, A BID OMITTING OPTION PRICES WOULD BE NONRESPONSIVE. HOWEVER, THE IFB DID NOT ESTABLISH A CEILING FOR THE OPTION PRICES OR PROVIDE FOR INCLUDING THEM IN THE BID EVALUATION; THEREFORE, THE FAILURE TO QUOTE OPTION PRICES IS NOT A MATERIAL DEVIATION SINCE THERE IS SUBSTANTIALLY NO DIFFERENCE BETWEEN A BID WITH AN UNREASONABLY HIGH OPTION PRICE AND A BID WITHOUT ANY OPTION PRICE.

TO THE SECRETARY OF THE NAVY, FEBRUARY 23, 1972:

REFERENCE IS MADE TO THE LETTER OF JANUARY 25, 1972, WITH ENCLOSURES, FROM COUNSEL, NAVAL AIR SYSTEMS COMMAND (AIR-OOC:CM/TAH), RELATIVE TO THE PROTEST OF COMMUNICOLOGY, INCORPORATED, AGAINST AWARD OF A CONTRACT TO ANY OTHER BIDDER UNDER INVITATION FOR BIDS NO. N00019-72-B-0012, A TOTAL SMALL BUSINESS SET-ASIDE.

THE SOLICITATION WAS FOR VARIOUS QUANTITIES OF SPECIFIED RADAR TRANSPONDERS AND INCLUDED OPTIONS FOR QUANTITIES OF TWO OF THE TRANSPONDERS. AT BID OPENING, COMMUNICOLOGY WAS FOUND TO BE THE APPARENT LOW BIDDER, BUT THE CONTRACTING OFFICER CONSIDERED THE BID NONRESPONSIVE BECAUSE COMMUNICOLOGY HAD NOT ENTERED A UNIT PRICE FOR EITHER OF THE OPTION ITEMS. COMMUNICOLOGY IMMEDIATELY PROTESTED, AND AWARD HAS NOT BEEN MADE.

PARAGRAPH D-4 OF THE IFB STATED THAT OFFERS WOULD BE EVALUATED "EXCLUSIVE OF THE OPTION QUANTITY." IT WAS FURTHER STATED ON PAGE 4-3 THAT A UNIT PRICE, BUT NOT A TOTAL PRICE, WAS TO BE ENTERED IN THE IFB SCHEDULE FOR THE OPTION ITEMS. PARAGRAPH J-7 STATED THAT "THE GOVERNMENT MAY INCREASE THE QUANTITY OF SUPPLIES CALLED FOR HEREIN BY REQUIRING THE DELIVERY OF THE NUMBERED LINE ITEM IDENTIFIED IN THE SCHEDULE AS AN OPTION ITEM, IN THE QUANTITY AND AT THE PRICE SET FORTH THEREIN *** ." PARAGRAPH J-8 PROVIDED THAT THE OPTION WOULD BE EXERCISED, IF AT ALL, WITHIN 180 DAYS AFTER DATE OF THE CONTRACT.

THE PROTESTOR CLAIMS THAT NOTHING IN THE SOLICITATION REQUIRED SUBMISSION OF PRICES FOR THE OPTION ITEMS AND THAT ITS BID CANNOT BE NONRESPONSIVE BECAUSE IT DID IN FACT COMPLY WITH ALL MATERIAL REQUIREMENTS OF THE IFB.

ON SEVERAL OCCASIONS WE HAVE CONSIDERED A BIDDER'S FAILURE TO BID ON OPTION QUANTITIES. IN 46 COMP. GEN. 434 (1966), CITED BY BOTH THE PROTESTOR AND YOUR COUNSEL, A BIDDER PROTESTED REJECTION OF HIS BID FAILURE TO BID ON AN OPTION ITEM. WE HELD THAT:

THE FAILURE TO QUOTE ON THE OPTION QUANTITY *** UNQUESTIONABLY WAS A MATERIAL DEVIATION IN THAT IT DEPRIVED THE GOVERNMENT OF A SUBSTANTIVE AND VALUABLE RIGHT TO INCREASE THE QUANTITY *** WITHIN 180 DAYS AFTER RECEIPT OF NOTICE OF AWARD. FURTHERMORE, THE INVITATION SPECIFICALLY PROVIDED THAT "BIDDERS MUST BID ON ALL ITEMS *** OR THEIR BIDS WILL BE REJECTED AS NONRESPONSIVE" *** . 46 COMP. GEN. 434, 435.

THE PROTESTOR DISTINGUISHES THIS CASE ON THE GROUNDS THAT THE INSTANT IFB DOES NOT CONTAIN ANY LANGUAGE REQUIRING REJECTION OF BIDS NOT INCLUDING OPTION PRICES. YOUR COUNSEL, ON THE OTHER HAND, STATES THAT THE BASIS FOR OUR HOLDING WAS THE DEPRIVATION OF THE GOVERNMENT'S RIGHT TO INCREASE THE QUANTITY AND THAT THE LANGUAGE OF THE IFB MERELY PROVIDED AN ADDITIONAL BASIS. WE BELIEVE, HOWEVER, THAT TWO MORE RECENT DECISIONS ARE MORE ANALOGOUS TO THE CASE AT HAND.

IN B-165799, FEBRUARY 27, 1969, INVOLVING THE NAVAL ORDNANCE SYSTEMS COMMAND, A BIDDER FAILED TO BID ON OPTION ITEMS. WE SAID THAT THE FAILURE TO BID ON THE OPTION QUANTITIES DID NOT RENDER THE BID NONRESPONSIVE SINCE "THE OPTION QUANTITIES WERE NOT TO BE EVALUATED AND BIDDERS WERE NOT REQUIRED TO SUBMIT OPTION PRICE 'THE SAME' AS THE PRICES BID" ON THE BASIC ITEMS. WE NOTED THAT "THEY WERE FREE TO QUOTE UNREALISTICALLY HIGH OPTION PRICES," AND THAT UNDER THE CIRCUMSTANCES THE FAILURE TO SUBMIT OPTION PRICES WAS NOT MATERIAL. SHORTLY THEREAFTER, IN B-166138, APRIL 11, 1969, INVOLVING THE NAVAL AIR SYSTEMS COMMAND, WE AGAIN HELD THAT A BIDDER'S FAILURE TO QUOTE AN OPTION PRICE WAS NOT MATERIAL UNDER THE CIRCUMSTANCES. WE REJECTED THE ARGUMENT THAT SUCH A FAILURE WAS MATERIAL BECAUSE OF THE STATEMENT IN THE IFB SCHEDULE PROVIDING THAT OFFERORS SUBMITTING PRICES FOR ANY QUANTITIES LESS THAN THOSE CALLED FOR WOULD BE REJECTED AS NONRESPONSIVE.

IF THE IFB SPECIFIES THAT OPTION PRICES MAY NOT EXCEED THE BASIC BID PRICES OR ESTABLISHES SOME OTHER STANDARD FOR THE OPTION PRICE, IT IS CLEAR THAT THE GOVERNMENT WOULD BE DEPRIVED OF A VALUABLE BENEFIT IF IT COULD NOT EXERCISE AN OPTION SO LIMITED. SIMILARLY, WHERE THE GOVERNMENT INTENDS TO EXERCISE THE OPTION, OR A PORTION OF IT, AT TIME OF AWARD, A BID WITHOUT AN OPTION PRICE WOULD HAVE TO BE REGARDED AS NONRESPONSIVE.

HOWEVER, WHEN THE IFB DOES NOT ESTABLISH A CEILING FOR OPTION PRICES AND THE OPTION PRICES ARE NOT TO BE INCLUDED IN THE EVALUATION, WE DO NOT THINK THE FAILURE OF A BIDDER TO QUOTE OPTION PRICES MAY BE CONSIDERED AS A MATERIAL DEVIATION. WE SEE NO SUBSTANTIAL DIFFERENCE BETWEEN A BID WITH AN UNREASONABLY HIGH OPTION PRICE AND A BID WITHOUT ANY OPTION PRICE. SINCE AN OTHERWISE PROPER BID COULD NOT BE REJECTED BECAUSE OF THE HIGH OPTION PRICE WHERE THE OPTION QUANITY WAS NOT TO BE INCLUDED IN THE AWARD, WE SEE NO REASON WHY THE ABSENCE OF ANY OPTION PRICE SHOULD RESULT IN REJECTION. IN BOTH CASES, THE GOVERNMENT'S POSITION IS BASICALLY THE SAME.

WE NOTE THAT THE NEXT LOW BIDDER IN THIS CASE QUOTED IDENTICAL UNIT PRICES FOR BOTH THE BASIC AND OPTION QUANTITIES. BUT THIS FACT DOES NOT ALTER OUR VIEW OF THE SITUATION. WHETHER OR NOT THE FAILURE TO SUBMIT OPTION PRICES IS MATERIAL AND CONSTITUTES GROUNDS FOR BID REJECTION MUST BE DETERMINED ON THE BASIS OF THE TERMS AND CONDITIONS OF THE SOLICITATION AND NOT ON THE BASIS OF THE OPTION PRICES QUOTED IN THE OTHER BIDS.

FOR THE FOREGOING REASONS, WE BELIEVE THE FAILURE OF COMMUNICOLOGY, INCORPORATED, TO INCLUDE OPTION PRICES IN ITS BID DID NOT RENDER THE BID NONRESPONSIVE. OF COURSE, WE RECOGNIZE THAT YOUR DEPARTMENT CAN CHOOSE TO RESOLICIT BIDS UNDER A REVISED OPTION PROVISION IF IT IS DEEMED NECESSARY TO INCLUDE OPTION RIGHTS IN THE CONTRACT.

THE FILES FORWARDED WITH THE LETTER OF JANUARY 25, 1972, ARE RETURNED.