_______________________ DENIED: April 11, 1996 _______________________ GSBCA 13452-TD UNITED MANAGEMENT INC., Appellant, v. DEPARTMENT OF THE TREASURY, Respondent. Martha F. Dekle, Brunswick, GA, counsel for Appellant. David H. Brunjes, Office of Legal Counsel, Federal Law Enforcement Training Center, Department of the Treasury, Glynco, GA, counsel for Respondent. Before Board Judges DANIELS (Chairman), WILLIAMS, and DeGRAFF. DeGRAFF, Board Judge. Respondent moves for summary relief. Because there are no material facts in dispute and because respondent is entitled to relief as a matter of law, the motion is granted and the appeal is denied. Findings of Fact On March 11, 1994, the Department of the Treasury (Treasury) awarded a contract to United Management Inc. (United) to provide grounds maintenance services at the Federal Law Enforcement Training Center in Glynco, Georgia. These clauses of the contract are relevant to the resolution of the pending motion: F.2 CONTRACT PERIOD The contract period shall be from date [sic] April 1, 1994 through September 30, 1994. The contract also contains 3 additional one year option periods. See Section I clauses option to extend services 52.217-8 and option to extend term of the contract 52.217-9. I.8 52.217-9 - OPTION TO EXTEND THE TERM OF THE CONTRACT (MAR 89) [17.208(g)] (a) The Government may extend the term of this contract by written notice to the Contractor by modification prior to the expiration of the previous performance period; provided, that the Government shall give the Contractor a preliminary written notice of its intent to extend at least 60 days before the contract expires. The preliminary notice does not commit the Government to an extension. (b) If the Government exercises this option, the extended contract shall be considered to include this option provision. (c) The total duration of this contract, including the exercise of any options under this clause, shall not exceed 60 months. Exhibit 8.[foot #] 1 The contract was awarded based upon an evaluation of each bidder's total bid for the base period plus the three option years. The solicitation informed bidders, "Evaluation of options will not obligate the Government to exercise the option(s)." Exhibit 3. Discussion On August 17, 1995, United submitted a claim for $509,933 to the contracting officer. This amount is the sum of $125,000 (debt owed to a bank), $60,000 (debt owed to an individual), $47,000 (debt owed to others), $118,521 (anticipated profit for the second option year), and $159,412 (anticipated profit for the third option year). In its claim, United explains that Treasury extended the contract term only for the first one-year option period. United asserts that Treasury was obligated to extend the term of the contract for the second and third one-year option periods as well, unless United failed to perform. The claim does not challenge the accuracy of Treasury's estimate of the quantity of work that United would be required to perform. Exhibit 19. The contracting officer denied United's claim on October 13, 1995. Exhibit 23. United filed this appeal on October 25, 1995. Treasury filed a motion for summary relief. Treasury asserts that the contract was an option contract and argues that ----------- FOOTNOTE BEGINS --------- [foot #] 1 The cited exhibits are contained in the appeal file. It appears to the Board that both of the parties' briefs contain typographical errors when they refer to these exhibits. The Board's exhibit numbers are correct according to the index to exhibits prepared by Treasury. ----------- FOOTNOTE ENDS ----------- it was not obligated to exercise any of its options. Treasury states that its decision not to exercise all of its options was based upon a change in the scope of the grounds maintenance work to be performed, and that this change in scope was due to budgetary constraints imposed after the contract was awarded. Treasury's statement is supported by an affidavit from the Chief of the Services Contract Branch at the Federal Law Enforcement Training Center, who made the decision not to exercise the final two options contained in United's contract. We will grant Treasury's motion if there are no material facts in dispute and if Treasury is entitled to relief as a matter of law. Rule 8(g). There are no disputed material facts, and Treasury is entitled to relief as a matter of law because it was not obligated to exercise any of the options contained in the contract. United's response to Treasury's motion does not reveal a genuine dispute as to any material fact. United denies that the contract was an option contract, but does not provide any legal argument or facts in support of the denial. Rule 8(g)(4) puts parties on notice that an unsupported denial is not sufficient to create a genuine issue of material fact. United's bare denial does not create any genuine issue concerning the provisions of the contract. (Nor could it, given the clear language of the contract.) Also in response to Treasury's motion, United agrees that the scope of the work to be performed has changed, but denies that Treasury was subject to budgetary constraints. United supports its denial with an affidavit from its president stating that she prepared a bid for the new grounds maintenance contract and, in her view, a new contract will cost more than it would have cost to exercise the options remaining in United's contract. Even if United's evidence were sufficient to create a conflict with Treasury's evidence, United has not created a genuine issue concerning a material fact. As explained below, it is immaterial to a resolution of this motion whether budgetary constraints caused the change in the scope of work that led to Treasury's decision not to exercise the options contained in its contract with United. In Government Systems Advisors, Inc. v. United States, 847 F.2d 811 (Fed. Cir. 1988), the Court was called upon to interpret a contract that contained a provision similar to clause I.8 of United's contract and also titled, "Option to Extend the Term of the Contract." The Court found the provision to be clear and unambiguous, and held that nothing in the contract restricted the agency's bargained-for right to decline to exercise its option. The contract stated, in part, "If the Government exercises this option for renewal, the contract as renewed shall be deemed to include this option provision." Id. at 812 (emphasis added).[foot #] 2 The Court decided that this language ----------- FOOTNOTE BEGINS --------- [foot #] 2 The language contained in United's contract states, "If the Government exercises this option, the extended contract shall be considered to include this option provision." ----------- FOOTNOTE ENDS ----------- illustrated that the "option is a true option," and that the exercise of the option was within the "complete discretion" of the agency. Id. at 813. In Continental Collection & Disposal, Inc. v. United States, 29 Fed. Cl. 644 (1993), the court explained that an option contract generally places an obligation upon the person who gives the option, and not upon the person who holds the option: The government's failure to exercise an option in a contract does not ordinarily give rise to a breach of contract action. A standard option provision in a government contract obliges the contractor to perform the additional contract work if the government chooses to exercise the option, but it does not create a legal obligation on the part of the government to exercise the option and require the work. See Dynamics Corp. of Am. v. United States, 182 Ct.Cl. 62, 74, 389 F.2d 424, 431 (1968); Government Systems Advisors, Inc. v. United States, 847 F.2d 811, 813 (Fed. Cir. 1988). 29 Fed. Cl. at 650 (quoting Optimal Data Corp. v. United States, 17 Cl. Ct. 723, 731 (1989), aff'd, 904 F.2d 45 (Fed. Cir. 1990) (table)). The contract at issue in Continental contained a clause nearly identical to clause I.8 in United's contract. The court decided that the language of the contract demonstrated that Continental was bound to perform work if the agency exercised its options, but did not bind the agency to exercise its right to extend the term of the contract. As does United, Continental argued that the agency was obligated to exercise its options so long as Continental performed adequately. The court rejected this argument because the contract did not include any "performance-based obligation" on the part of the agency to exercise its options. Id. The contract clauses at issue in Government Systems and Continental are substantially similar to the clause at issue in our case. United's contract contained a section titled, "Option to Extend the Term of the Contract," which explained that Treasury "may" extend the term of the contract, and explained what would happen "[i]f" Treasury exercised the options. The contract imposed no obligation upon Treasury to extend the term of the contract, and did not limit the circumstances in which Treasury could decline to exercise its option rights. The contract did not require Treasury to exercise its options if United performed adequately, and did not state that Treasury could decline to exercise its options only if United failed to perform. The contract did not require Treasury to exercise its options in the absence of budgetary constraints, and did not state that Treasury could decline to exercise its options only if budgetary constraints were imposed. The language of the contract establishes that Treasury possessed true options that it could exercise, or not exercise, at its discretion. Treasury was within its contractual rights not to exercise the final two contract options, and so Treasury is entitled to relief as a matter of law. United's arguments do not persuade us that we should deny Treasury's motion. United cites to Crown Laundry and Dry Cleaners, Inc. v. United States, 29 Fed. Cl. 506 (1993), for the proposition that the contract between United and Treasury was a requirements contract. United never explains what difference it makes whether the contract was a requirements contract or an indefinite quantity contract or some other type of contract. The issue of whether this was a requirements contract is irrelevant to deciding whether Treasury was required to exercise the options contained in the contract. According to United, in Crown Laundry, the fact that the Government did not exercise all of the option years of the contract was immaterial to the court's holding that the Government was "required to fully perform the contract." United's Response at 6. We disagree with United's characterization of the court's holding. In Crown Laundry, the Government did not exercise any of its contract options. The plaintiff performed during the base year and incurred some costs which it did not recover due to the Government's faulty quantity estimates. The plaintiff made a claim for the amount that it lost during the base year for the faulty estimates, and the court awarded an amount that represented the costs incurred in performing the one-year contract. The court did not award Crown Laundry any damages for any of the unexercised option years. Contrary to United's argument, the court did not hold that the Government was required to perform the contract. United cites to several cases which hold that the Government may be liable if it provides bidders with inaccurate estimates. These decisions are irrelevant because United's claim does not challenge the accuracy of Treasury's estimate of the quantity of work that United would be required to perform. United states that Treasury inspected United's equipment after the contract was awarded. Assuming this is true, it does not have any bearing upon the outcome of this case. We know of no authority to support an argument that Treasury was required to exercise the contract's options if it inspected United's equipment. Finally, United argues that Treasury should have exercised the contract's options because the contract was awarded based upon Treasury's evaluation of United's bid for the base period plus its bid for the option years. The solicitation, however, informed bidders that Treasury's evaluation of bids for the option years did not obligate Treasury to exercise the options. In considering a similar argument, the court in Continental stated, "The suggestion that the government cannot request responses to solicitations which call for options, without obligating itself to exercise those options, is nonsense." 29 Fed. Cl. at 653. We agree. Treasury's solicitation plainly notified bidders that it was not obligated to exercise the contract's options. Decision Because there are no material facts in dispute and because Treasury is entitled to relief as a matter of law, Treasury's motion for summary relief is granted and the appeal is consequently DENIED. ______________________________ MARTHA H. DeGRAFF Board Judge We concur: _____________________________ _____________________________ STEPHEN M. DANIELS MARY ELLEN COSTER WILLIAMS Board Judge Board Judge