TITLE:  Building Construction Enterprises, Inc., B-294784, December 20, 2004
BNUMBER:  B-294784
DATE:  December 20, 2004

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   Decision

   Matter of:   Building Construction Enterprises, Inc.

   File:            B-294784

   Date: December 20, 2004

   Kendall Schoonover for the protester.

   Denis L. Durkin, Esq., and Edgar Stanton, Esq., Baker & Hostetler, for
David Boland, Inc., the intervenor.

   Capt. Joseph V. Fratarcangeli, and Roger Christopher Paden, Esq.,
Department of the Army, for the agency.

   Katherine I. Riback, Esq., and Guy R. Pietrovito, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Agency properly awarded contract based on evaluation of base and optional
items, where invitation for bids informed bidders that option items would
be evaluated and there was not reasonable certainty that the funds would
be unavailable to permit the exercise of the options.

   DECISION

   Building Construction Enterprises, Inc (BCE) protests the award of a
contract to David Boland, Inc. by the U.S. Army Corps of Engineers under
invitations for bids (IFB) No. W912DQ-04-B-0011 for the construction of
the Combined Arms Collective Training Facility at Fort Riley, Kansas.  BCE
contends that the Corps should not have evaluated bidders' option prices.

   We deny the protest.

   The IFB sought bids for the construction of a combined arms collective
training facility, an urban assault course, an offensive defensive
building, live fire shoot house, a breach facility, and airfield
buildings.  The IFB included five option items, including Option 2 for
bituminous paving for a landing zone and concrete runaround and Option 3
for concrete paving of the same landing zone and concrete runarounds. 
Bidders were informed that Options 2 and 3 were mutually exclusive and
that only one of these two options would be exercised.  IFB amend. 1, at
4.  The IFB also included the standard "Evaluation of Options" clause,
Federal Acquisition Regulation (FAR) SA 52.217-5, which provides as
follows:

   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). 

   IFB at 12.  The IFB also included a Notice of Price Evaluation Preference
for Historically Underutilized Business Zone (HUBZone) Small Business
Concerns, FAR S 52.219-4, which provides that for evaluation purposes the 
agency would add 10 percent to the price of all bids, except bids from HUBZone
small business concerns and otherwise successful bids from small business
concerns.  IFB at 12-13.

   At bid opening, the agency received five bids, including those of BCE (a
large business), David Boland, Inc. (a HUBZone small business concern),
and MW Builders (a large business).  After applying the HUBZone price
evaluation preference the agency determined that David Boland had
submitted the low bid with an evaluated price of $25,117,000, that MW
Builders had submitted the second low bid with an evaluated price of
$25,528,800, and that BCE's bid, with an evaluated price of $26,110,795,
was third low.  Contracting Officer's Statement at 3.  The agency awarded
the contract to David Boland, and this protest followed. 

   BCE argues, citing FAR S 17.206(b),[1] that the contracting officer should
not have evaluated bidders' option pricing, because he could not confirm
that "funds are currently available or will be available for any or all of
the options."  Comments at 2.

   Where, as here, the IFB includes a provision requiring the evaluation of
options, such options must be evaluated "[e]xcept when it is determined in
accordance with FAR SA 17.206(b) not to be in the government's best
interest."  FAR S 52.217-5; Contractors NW, Inc., B-293050, Dec. 19, 2003,
2003 CPD P 232 at 4.  The only example presented in FAR S 17.206(b) of a
circumstance that would permit the agency to not evaluate option prices,
where a solicitation provides for such an evaluation, is where there is
reasonable certainty that funds will not be available to permit the
exercise of the option. 

   Here, the contracting officer states that he intended to exercise options
at the time of contract award if bid prices were low enough to permit him
to do so.  However, because the bid prices were not low enough to permit
the contracting officer to exercise options at contract award, the
contracting officer states that Fort Riley is "attempting to secure
additional funds so that options could be awarded" and that he
anticipated, based upon his experience, that additional funds might become
available, although that is not certain.  Affidavit of Contracting Officer
at 2.

   Although the contracting officer cannot state with certainty that funds
will be available to exercise options, this is not the test.  FAR S
17.206(b) does not require the agency to be clairvoyant in forecasting the
availability of option quantity funding.  Charles J. Merlo, Inc.,
B-277384, July 31, 1997, 97-2 CPD P 39 at 3-4.  Absent a showing that
there is reasonable certainty that funds will not be available, an agency
should evaluate option prices, where the solicitation provides for their
evaluation.  See Federal Contracting, Inc., B-250304.2, June 23, 1993,
93-1 CPD P 484 at 6.  The record here shows that the agency is continuing
to seek funds to permit the exercise of the options and that the
contracting officer does not know with reasonable certainty that funds
will be unavailable to permit the exercise of the options.  Accordingly,
we find that the agency reasonably evaluated option prices, as was
provided for by the IFB.

   BCE also argues that the Corps should not have evaluated the option
prices, because two of the IFB's options are mutually exclusive and could
not both be exercised.  The Army responds that this argument is an
untimely challenge to the terms of the solicitation, which must be filed
prior to bid opening under our Bid Protest Regulations, 4 C.F.R. S
21.2(a)(1) (2004).  BCE contends, citing our decision in Kruger Constr.,
Inc., B-286960, March 15, 2001, 2001 CPD P 43, that a post-award
challenge to the evaluation of option prices is timely, even where the IFB
provides for the evaluation of options, where the agency knows with
reasonable certainty that not all options can or will be exercised.

   We agree with the Corps that BCE's assertion that the agency should not
have evaluated any of the option prices, because two of the five options
are mutually exclusive, is an untimely challenge to the terms of the IFB. 
In Kruger, we found timely the protester's challenge to the agency's
evaluation of two mutually exclusive, alternate option items, because it
was the agency's decision to add the prices for both option items in the
price evaluation, despite the fact that the agency knew it could not
exercise both options, that was the event that triggered the protest; the
protester in Kruger did not argue that the remaining option items should
not be evaluated.  Kruger Constr., Inc., supra, at 4-5.  Here, however,
BCE does not challenge the evaluation of only the two mutually exclusive
options but asserts that, because these two options cannot both be
exercised, that the agency should not evaluate any of the option items. 
Thus, this challenge is not to the agency's decision to evaluate both of
these alternative options items but is a challenge to the solicitation's
evaluation scheme that provided for the evaluation of both the base and
option items.

   As to the two mutually exclusive options, our calculations indicate that
the protester's bid would not be low, even if one of the two alternative
option items were excluded from the agency's price evaluation.  That is,
BCE's bid price would not be low regardless of which option (Option 2 or
3) was excluded from the agency's price evaluation.  The question that was
dispositive in Kruger is therefore of no relevance here. 

   The protest is denied.

   Anthony H. Gamboa

   General Counsel 

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   [1] FAR S 17.206(b) provides:

   The Contracting Officer need not evaluate offers for any option quantities
when it is determined that evaluation would not be in the best interests
of the Government and this determination is approved at a level above the
contracting officer.  An example of a circumstance that may support a
determination not to evaluate offers for option quantities is when there
is a reasonable certainty that funds will be unavailable to permit
exercise of the option.
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