TITLE:  ACC Construction Company, Inc., B-289167, January 15, 2002
BNUMBER:  B-289167
DATE:  January 15, 2002
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Decision

Matter of: ACC Construction Company, Inc.

File: B-289167

Date: January 15, 2002

Karl Dix, Esq., Smith, Currie & Hancock, for the protester.

Charles M. Powers for R.C. Construction Co., Inc., an intervenor.

William A. Hough, Esq., and Susan K. Weston, Esq., U.S. Army Corps of
Engineers, for the agency.

Linda C. Glass, Esq., and Michael R. Golden, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

Where bids (including options) exceeded the available funding and agency
does not have additional funds available to exercise the options, the
contracting activity, in accordance with the solicitation provision for
evaluation of options, reasonably determined that evaluation of options
would not be in the best interest of the government.

DECISION

ACC Construction Co., Inc. protests the proposed award of a contract to R.C.
Construction Company under invitation for bids (IFB) No. DACA21-01-B-0010,
issued by the Army Corps of Engineers for the construction of an ammunition
holding area at Fort Bragg, North Carolina.

We deny the protest.

On July 18, 2001, the agency issued the solicitation for a fixed-price
construction contract. The solicitation, as amended, requested prices for
the following: contract line item number (CLIN) 0001, construction of new
ammunition storage facility; CLIN 0002, site preparation and development;
CLIN 0003, undercut excavation; CLIN 0004, option No. 1, munitions handling
system Type F magazine; CLIN 0005, option No. 2, munitions handling system,
oval arches; CLIN 0006, option No. 3, scissors lift Type F magazine; CLIN
0007, option No. 4, scissors lift, oval arches; CLIN 0008, option No. 5,
security system; CLIN 0008AA, option No. 5, material only; CLIN 0008AB,
installation only. Agency Report (AR) encl. 10, IFB schedule. The
solicitation notified bidders that options would be evaluated in accordance
with Federal Acquisition Regulation (FAR) 52.217-5, which provides:

Except when it is determined in accordance with FAR 17.206(b)

not to be in the Government's best interests, the Government will

evaluate offers for award purposes by adding the total price for all

options to the total price for the basic requirement. Evaluation of

options will not obligate the Government to exercise the option(s).

AR, encl. 9, IFB, at 10.

The agency received nine bids. The low bidder, ECI Construction, notified
the Corps that its bid contained a mistake and the Corp permitted the firm
to withdraw its bid. ACC submitted the second low bid of $15,784,240. AR,
encl. 6, Abstract of Bids. R.C. submitted the third low bid of $15,962,000.
Id. In its bid, R.C. certified itself as an eligible HUBZone small business
concern, thereby entitling it to the 10 percent evaluation preference. [1]
AR, encl. 7, R.C.'s Bid. After application of the HUBZone preference, R.C.
became the low bidder.

On October 12, ACC filed this protest with our Office. Specifically, ACC
objected to the award to R.C. on the grounds that: (1) R.C.'s bid is
materially unbalanced; (2) the agency has improperly applied the HUBZone
evaluation preference to this procurement; (3) R.C. failed to provide the
necessary certifications in its bid to claim the preference and (4) R.C.'s
bid was an unauthorized facsimile bid because all of R.C.'s prices were
transmitted by facsimile as a bid modification and the solicitation did not
allow submission of facsimile bids.

On December 19, 2001, after the development of the record, including the
submission of the agency report in response to the protest, and the
submission of comments from both ACC and R.C., Army headquarters notified
the Corps in writing that its pending request for funds to cover the option
work under this IFB was denied. [2] Due to the unavailability of funds, the
Corps determined that it is in the best interest of the government to
evaluate offers without consideration of the option prices consistent with
the solicitation provision that the government will evaluate offers for
award purposes by adding the total price for all options to the basic bid
except when it determined not to be in the government's best interests. If
the options are not part of the evaluation, R.C. is low with or without
application of the HUBZone preference, and the Corps proposes to award the
base items to R.C.

In our view, the agency's decision to evaluate the bids without considering
the option prices moots ACC's unbalanced bid and HUBZone allegations since
R.C. is the low bidder without application of the HUBZone preference and the
unbalancing essentially relates to the scissors lift option, an option which
the agency is not exercising.

ACC objects to the agency's proposal to award the base items to R.C., rather
than to cancel and resolicit. [3] ACC contends that the solicitation
provides that the contract may be extended for a total of 5 years, and that
the contracting officer cannot legitimately state with reasonable degree of
certainty that funding will not become available in the next 5 years.

We find the determination made here by the agency was reasonable. The FAR
sect. 17.206(b) provides an agency with authority to not evaluate options in
making an award, even where the solicitation informed bidders that options
would be evaluated, where the agency properly determines that evaluation of
options is not in the best interests of the government. Thus, a
determination not to evaluate options, made after receipt of bids, does not
preclude an award on the basis of base bid items and, by implication, does
not require the receipt of new bids. Foley Co., B-245536, Jan. 9, 1992, 92-1
CPD para. 47 at 3; see also Occu-Health, Inc., B-270228.3, Apr. 3, 1996, 96-1
CPD para. 196 at 4. Under FAR 17.206(b), the unavailability of funds is an
appropriate reason for not evaluating the option prices for award. Here,
Army headquarters, in response to the activity's request to fund the option
items for the facility, notified the activity that no funds are available to
fund these options. Headquarters advised that while the options would
improve ammunition handling, the munitions handling and scissors lift
equipment were not in the Congressionally approved project scope and
therefore no funds were programmed for their construction, and that in fact
the project was already $2,000,000 above the appropriated amount. The Corps
confirms that there is "no longer any reasonable likelihood that options
will be awarded. The funds have been denied and the options will not be
exercised in this procurement." Corps Submission of January 8, 2002. Given
the headquarters decision not to fund the options, the agency's decision not
to evaluate option prices for award was reasonable and in accordance with
the solicitation. [4]

The protester argues that our decision, Occu-Health, Inc., B-270228;
B-270228.3,
Apr. 3, 1996, 96-1 CPD para. 196, should control here. In that decision, we
concluded that an agency cannot rely on FAR sect. 17.206(b) without requesting
revised proposals when the agency knows, prior to the receipt of best and
final offers (BAFOs), that its needs have materially changed, so that it
will not be evaluating options. However, as the protester itself has noted,
the facts in Occu-Health decision were substantially different from the
current situation. In Occu-Health, the agency decided prior to the receipt
of BAFOs that it would be more effective not to exercise options to provide
health services because of a base realignment and reorganization. Thus, the
agency had the opportunity to advise offerors prior to receipt of BAFOs that
agency needs had changed materially and to allow offerors to submit revised
proposals on the basis of the agency's revised needs. Here, the agency's
decision to not evaluate options is based on the unavailability of funds,
which only became clear after bids were opened. Moreover, unlike
Occu-Health, Inc., the agency's immediate needs can be satisfied through the
award of the base bid items. Further, ACC does not argue, as did the
protester in Occu-Health Inc., that it would have reduced its base bid
price, had it known the options would not be evaluated.

ACC speculates that the agency's determination that there is no money to
fund the options is actually motivated by the agency's desire to defeat the
protest and that funding could become available in the future. Government
officials are presumed to act in good faith and, where a protester contends
that contracting officials are motivated by bias or bad faith, it must
provide convincing proof since this Office will not attribute unfair or
prejudicial motives to procurement officials on the basis of inference or
suppositions. ACS Sys. & Eng'g., Inc., B-275439.3, Mar. 31, 1997, 97-1 CPD para.
126 at 5. Throughout the protest process, the agency defended its decision
to

award to R.C. and addressed all issues raised by ACC. The Corps made the
decision

to evaluate bids without consideration of options only after it was advised
by headquarters that funds were not available to fund the options. We see no
basis in the record to question the agency's good faith.

The protest is denied.

Anthony H. Gamboa

General Counsel

Notes

1. Federal Acquisition Regulation sect. 19.001 defines the term "HUBZone" as "a
historically underutilized business zone, which is an area located within
one or more qualified census tracts, qualified nonmetropolitan counties, or
lands within the external boundaries of an Indian reservation." The Small
Business Administration maintains the list of HUBZone concerns.

2. Headquarters agreed to fund the option for installation of a security
system only. The Corps states that it will most likely exercise this
inexpensive option and it does not affect R.C.'s standing as low bidder.

3. Regarding whether the agency improperly accepted R.C.'s facsimile bid
modifications, which contained R.C.'s prices for the work, in a conference
call with all parties, our Office pointed out that where, as here, the
solicitation authorizes the modification of bids by facsimile, a bidder may
use a facsimile transmission to modify unit prices or line items that were
not previously bid. American Eagle Indus., Inc., B-256907, Aug. 8, 1994,
94-2 CPD para. 156 at 2. While the protester was given the opportunity to submit
a written rebuttal, it failed to comment on this issue. We therefore deem it
to be abandoned. See LSS Leasing Corp., B-259551, Apr. 3, 1995, 95-1 CPD para.
179 at 5 n.6.

4. The protester speculates that funding could become available at a later
date if the agency extends the contract past the initial 600 days, as
authorized by the IFB clause regarding the option to extend the term of the
contract. While this clause gives the agency the right to extend the term of
the contract, there is nothing in the record to suggest that the contract
will not be completed in the initial 600 days or that the decision not to
fund the options will change.