TITLE: B-311196, Marshall Company, Ltd., April 23, 2008
BNUMBER: B-311196
DATE: April 23, 2008
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B-311196, Marshall Company, Ltd., April 23, 2008

   Decision

   Matter of: Marshall Company, Ltd.

   File: B-311196

   Date: April 23, 2008

   Johnathan M. Bailey, Esq., and Theodore M. Bailey, Esq., Bailey & Bailey,
   PC, for the protester.
   Carlton A. Arnold, Esq., Army Corps of Engineers, for the agency.

   Sharon L. Larkin, Esq., and James A. Spangenberg, Esq., Office of the
   General Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Agency's evaluation of option pricing is unobjectionable where the record
   does not evidence "reasonable certainty" that funding is not available or
   that options will not be exercised.

   DECISION

   Marshall Company, Ltd., protests the award of a construction contract to
   Anthony & Gordon Construction Co. (A&G) under request for proposals (RFP)
   No. W912QR-06-R-0058, issued by the Army Corps of Engineers. Marshall
   contends that the agency should not have evaluated the offerors' option
   prices.

   We deny the protest.

   The RFP, set aside for historically underutilized business zone (HUBZone)
   small businesses, provided for award of a fixed-price contract to design
   and construct a 120,000 square-foot controlled humidity warehouse with a
   1,200 square-foot administrative area in Corpus Christi, Texas. RFP at 1.
   Award was to be made on a best value basis, considering experience, past
   performance, technical proposal information, management, and price. Id.
   amend. 1, sect. 114, at 1-9. All of the non-price factors, when combined,
   were considered equal to price. Id. at 2.

   The RFP provided for a base period to design and construct the facilities,
   perform sitework, and install telephone and other "OMAR-funded" items[1];
   with six separate options for various paving upgrades and a building
   enlargement. RFP at 5-6. The RFP contained the standard clause "52.217-5
   Evaluation of Options (Jul 1990)," which stated:

     Except when it is determined in accordance with [Federal Acquisition
     Regulation (FAR) sect.] 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).

   RFP at 13-14. The RFP further required that offerors' option pricing "be
   good for 90 days after award of the contract." RFP at 7.

   Marshall and A&G submitted proposals for evaluation. The source selection
   authority (SSA) rated both proposals "good" under the experience, past
   performance, and technical proposal information factors, and found there
   to be "no qualitative difference" between proposals under these factors.
   A&G's proposal, however, was found to be superior to Marshall's under the
   management factor, where A&G's proposal received a rating of "good" and
   Marshall's proposal received a rating of "satisfactory." A&G's proposed
   price, including all options, was $9,828,000. Marshall's proposed price,
   including all options, was $81,900 higher at $9,909,900. The SSA selected
   A&G's higher rated and lower priced proposal for award, and Marshall
   protested. Agency Report, Tab 5, Source Selection Decision, at 2.

   Marshall contends that the agency should not have evaluated all of the
   option prices because the agency did not have a reasonable expectation
   that it would be able to obtain funding for these options. If all of the
   options were not evaluated, Marshall asserts, its proposal would have been
   lower in price and could have been determined to be the best value.

   Where, as here, the solicitation includes a provision requiring the
   evaluation of options, such options must be evaluated "[e]xcept when it is
   determined in accordance with FAR [sect.] 17.206(b) not to be in the
   Government's best interests" to exercise the options.[2] FAR sect.
   52.217-5. FAR sect. 17.206(b) provides that it may not be in the
   government's best interests to evaluate options "when there is a
   reasonable certainty that funds will be unavailable to permit exercise of
   the option."

   Here, the contracting officer states that she fully intended to award the
   options "as future funds become available" and that there was a
   "reasonable likelihood" that the options would be exercised, as evidenced
   by a memorandum she prepared three months before award. Agency Report, Tab
   4, Contracting Officer's Determination for Use of Option, at 1; Tab 9,
   Contracting Officer's Affidavit, para. 8. In support of these statements,
   the contracting officer explains that an additional $2 million has already
   been made available for options on this project, and she has provided
   documentation showing "remaining funding authorities and the threshold
   limits" available for this project. Agency Report, Tab 9, Contracting
   Officer's Affidavit, para. 7; Tab 11, Request Award Construction Funds, at
   1.

   Marshall asserts, without support, that additional funding is "unlikely"
   and that, absent more definitive proof by the agency that funding is
   available, the contracting officer should not have evaluated option
   pricing. Protester's Comments at 2. However, Marshall misconstrues the
   burden of proof applicable to this issue. The test is not whether a
   contracting officer can state with certainty that funds will be available
   to exercise options. Building Constr. Enters., Inc., B-294784, Dec. 20,
   2004, 2004 CPD para. 251 at 2; Contractors NW, Inc., supra, at 4. Rather,
   FAR sect. 17.206(b) provides that options should be evaluated unless there
   is "reasonable certainty" that funds will not be available. Charles J.
   Merlo, Inc., B-277384, July 31, 1997, 97-2 CPD para. 39 at 3-4. The record
   does not show that there was "reasonable certainty" that funding is not
   available. Thus, we cannot find unreasonable the agency's determination to
   evaluate option pricing in this case.

   The protest is denied.

   Gary L. Kepplinger
   General Counsel

   ------------------------

   [1] "OMAR" refers to Operations and Maintenance, Army Reserve.

   [2] Although FAR Subpart 17.2 by its terms does not apply to construction
   contracts, we conclude that the agency is bound to follow the procedures
   of this subpart where, as here, the agency has incorporated into the
   solicitation FAR sect. 52.217-5 providing for the evaluation of options.
   Contractors NW, Inc., B-293050, Dec. 19, 2003, 2003 CPD para. 232 at 3
   n.2.