Link: GAO Opinion
Agency: Department of Health and Human Services
Disposition: Protest denied.
Protest that contracting agency improperly exercised a contract option is denied where protester has not shown that agency failed to follow applicable regulations or that determination to exercise option was unreasonable.
General Counsel P.C. Highlight:
The protester contends that the agency’s determination to exercise the option was improper. GAO states that before an option can be exercised, an agency must make a determination that exercise of the option is the most advantageous method of fulfilling its needs, price and other factors considered. This determination may be based upon an informal market survey or price analysis that indicates that the option price is lower or more advantageous, and the contracting officer may consider other advantages from the exercise of the option. The contracting officer is accorded broad discretion in making this determination, and GAO therefore will not question the decision to exercise an option, rather than conduct a new procurement, unless it is shown to be unreasonable or contrary to applicable regulations.
The record shows that, before deciding to exercise the option, the agency conducted an informal price analysis and considered the costs of reprocuring its requirement instead of exercising the option. The agency also took into account the fact that the awardee’s performance was satisfactory and that the option price was reasonable. In challenging the agency’s decision to exercise the option, the protester primarily questions the agency’s informal price analysis, arguing that it was based on prices for services that are not comparable to the services required here. GAO need not address the protester’s contentions in this regard given that the record shows that the agency also concluded that the administrative costs associated with conducting a new competitive procurement for the services would be at least $1,930. This amount is higher than the greatest potential savings associated with the protester’s informal offer of $10,750. Given that the agency considered the awardee’s performance acceptable, found the option price reasonable, and concluded that any savings resulting from the protester’s informal offer would be more than offset by the costs of reprocurement, and in light of the agency’s broad discretion in this area, GAO has no basis to question the propriety of the agency’s exercise of the option.
The protest is denied.