VA Award Based on Optional Work it Could Not Afford Improper
In Glen Mar Construction, Inc., B-410603 (January 14, 2015), the GAO sustained a bid protest challenging the VA's evaluation of pricing in a solicitation for construction of a primary care building at the VA Medical Center in Vancouver, Washington. The solicitation was based on FAR Part 14, with award to the lowest priced offer.
Bidders were required to provide pricing for the base construction project and nine optional line items that the VA might select at the time of award, or within 120 days of award. The VA made award based on pricing of the base contract work and all nine optional items. The GAO held that this was improper because the VA knew with reasonable certainty that it lacked sufficient funds to purchase all of the optional items.
The VA maintained that the following provision allowed it to evaluate the base bid and all options when performing a price evaluation:
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).
(FAR 52.217-5)
The GAO held that the VA did not have unbridled discretion to make award based on the base bid and optional items. The GAO noted that FAR explains that, “[a]n example of a circumstance that may support a determination not to evaluate offers for option quantities is when there is reasonable certainty that funds will be unavailable to permit exercise of the option.”
FAR § 17.206(b).
The GAO held that "where an agency includes FAR clause 52.217-5 in a solicitation, it should not base its price evaluation on options that the agency knows with reasonable certainty it will not exercise." Here, the VA acknowledged during the protest that it did not have sufficient funding to pay for all of the option items. The GAO therefore sustained the protest.
