B-241066, Jan 15, 1991, 90-2 CPD 41

B-241066, Jan 15, 1991, 90-2 CPD 41

PROCUREMENT - Sealed Bidding - Low bids - Error correction - Price adjustments - Propriety Upward correction of a mistake in bid resulting from alleged failure to include proper subcontractor costs is permissible where evidence consisting of the bidder's worksheets, the subcontractor's quotations, and an adding machine tape clearly and convincingly demonstrate both the existence of a mistake and the intended bid, and the bid as corrected remained below the next low bid by approximately 3 percent.

Attorneys

Shoemaker Alexander, Inc.:

Shoemaker Alexander, Inc. protests the preaward determination of the Federal Bureau of Prisons, Department of Justice, to permit upward correction of the low bid submitted by Daniel J. Keating Construction Co. in response to invitation for bids (IFB) No. 100-508-0-CO. Shoemaker contends that correction is improper, that Keating's allegedly mistaken bid should be rejected, and that award should be made to Shoemaker as next in line for award.

We deny the protest.

The solicitation requested lump sum, firm-fixed-price base bids, along with additive alternates, for construction work to be performed at the Federal Correctional Complex in Allenwood, Pennsylvania. Nine bids were received and opened on August 15, 1990. Keating was the apparent low bidder with a base bid of $40,400,000, and Shoemaker was the apparent second-low bidder with a base bid of $43,570,000. Centex Simpson Construction Co., Inc. offered the next low base bid of $44,037,000.

Due to the determination of a large price variance between the low and next two low bidders when compared to the variances between other pairs of bidders, the Bureau asked Keating to verify its bid. Keating responded that its bid was understated due to a mistake; in tabulating amounts on its final estimate worksheet it had mistakenly entered the $2,000,000 site component of the electrical portion of its bid as $200,000, resulting in a discrepancy of $1,800,000. /1/ Keating therefore requested upward correction of its bid in this amount; alternatively, it requested that it be permitted to withdraw its bid. In support of its correction request, Keating submitted its final estimate worksheet, dated August 15, and adding machine tape, along with sworn affidavits to attest to the alleged mistake. The contracting officer found that the evidence clearly and convincingly proved the existence of both the mistake and the intended bid. He therefore concluded that Keating should be allowed to correct its base bid from $40,400,000 to $42,200,000, resulting in a total bid price of $42,265,700, after adjustment for additional bonding and insurance costs on the corrected bid.

On September 10, after the agency denied an agency-level protest by Shoemaker and the filing of this protest with our Office, Keating submitted additional supporting information to the agency, consisting of certified copies of telefaxed electrical work quotations received from subcontractors and worksheets for the electrical portion of its bid. this submission, Keating further explained how it had arrived at its intended total for the electrical portion of its bid as follows. Before the firm received subcontractors' quotations, it had made a total preliminary estimate of $5,500,000 for all electrical work based on its prior experience, allocating $3,500,000 for the buildings work and $2,000,000 for the site work. Upon receipt of subcontractor quotations for the total electrical work in unexpected higher amounts of from $6,428, -000 to $6,664,000, upward adjustment of its preliminary total electrical estimate became necessary. Keating adjusted its bid using the highest quotation received, $6,664,000, with the addition of $100,000 for a temporary electric pole line, for a total revised electrical estimate of $6,764,000. In incorporating this increased price in its total electrical work price, Keating adjusted its preliminary estimate by increasing only the buildings component of the electrical work-- from $1,264,000 to $4,764,000. Adding this amount to the $2,000,000 that had been allocated for electrical site work, resulted in the firm's $6,764,000 intended total electrical bid.

On September 12, while Shoemaker's protest was pending, the Bureau determined that urgent and compelling circumstances would not permit awaiting our decision and, on October 9, awarded a contract to Keating at the corrected price.

Shoemaker argues that correction of Keating's bid was improper because, even if there was a mistake, the amount of Keating's intended bid cannot be established. The protester contends that Keating's alleged intended bid of $2,000,000 for the site portion of the electrical work cannot be traced to credible pre-bid subcontractor quotations; Shoemaker itself received quotations for the same work ranging from $2,880,000 to $3,900,000. According to Shoemaker, reference to Keating's total electrical work bid is insufficient to establish the amount of the mistake since Keating has identified the site electrical component as the only portion of the bid where the mistake occurred. Further, Shoemaker maintains that it is unreasonable to assume that Keating would adjust only one portion of the electrical bid to correct any mistake, as the firm claims. Finally, Shoemaker argues that to allow correction with the close proximity of the bids here, where the corrected bid would be only 3 percent under its own bid, would jeopardize the integrity of the procurement process.

Upward correction of a low bid is proper where there is clear and convincing evidence to establish not only the existence of a mistake, but also the bid amount actually intended, provided that the correction would not result in the displacement of a lower bid. Federal Acquisition Regulation (FAR) Sec. 14.406-3; Lash Corp., 68 Comp.Gen. 232 (1989), 89-1 CPD Para. 120. Worksheets may constitute clear and convincing evidence if they are in good order and indicate the intended bid price, and there is no contravening evidence. Id. While a mistake is more difficult to prove the closer the corrected bid is to the next low bid, the fact that they are close does not automatically preclude correction. Utah Constr. and Dev. Co., B-222314, June 10, 1986, 86-1 CPD Para. 541.

We find that the agency's decision to permit upward correction of Keating's bid was based on clear and convincing evidence of the mistake and the intended bid. As already discussed, Keating's preliminary estimate documents show the firm calculated a total electrical work bid of $6,764,000. The worksheets further show that after Keating totaled the entries, it added additional amounts for bonding, insurance, and fee to the sum. The entries include electrical-buildings, with a sum of $4,764,000 and electrical-site with a sum of $2,000,000. While the worksheets thus show a total intended electrical work bid and, specifically, a $2,000,000 site electrical bid, Keating's adding machine tape indicates only $200,000 for site electrical work. In other words, Keating inadvertently dropped a zero in entering the amount for site electrical work on the adding machine. The worksheets and adding machine tape both are in good order, and there is nothing in the record that leads us to question that this is the manner in which the mistake occurred. This incorrect tabulation caused the bid to be $1,800,000 ($2,000,000 - $200,000) lower than the total of the entries shown on the estimate sheet, the amount of the claimed mistake.

The record also shows that Keating's total electrical bid can be traced to a credible pre-bid subcontractor quotation upon which Keating made further calculations. Specifically, the subcontractor quotation documents show a telefax quotation of $6,646,000 received from one subcontractor on the date of bid opening. Keating then transferred this quotation to its electrical bid determination worksheet as $6,664,000 (accidentally transposing the third and fourth numerals). The preliminary worksheet indicates that Keating then added $100,000 to this amount for a pole line, resulting in a total electrical sum of $6,764,000. From this total, the worksheet then shows that Keating subtracted $2,000,000 with the notation "site." The resulting sum, $4,764,000, is shown on the worksheet with the notation "use," apparently indicating the sum to be used for the buildings component of the electrical bid. The sums of $4,764,000 for buildings- electrical and $2,000,000 for site-electrical, shown on the bid determination worksheet, are the same as those on Keating's final estimating sheet, for a total electrical bid of $6,764,000. Again, the worksheets are in good order in that they are entirely consistent with Keating's explanation of its intended bid.

This evidence of Keating's total electrical bid supported by a subcontractor quotation convincingly establishes the firm's intended bid; even without a separate quote establishing the basis for Keating's site electrical work bid, we think Keating's intended bid has been sufficiently established. Keating's failure to develop a detailed breakdown for the site and buildings electrical work may be attributable to the fact that the electrical subcontractor quotations Keating received were for the most part for total electrical work and were not specifically divided into site and building components. Given these circumstances, indicating that Keating treated its electrical bid as a total, the fact that Keating adjusted only one of its two electrical components when correcting its preliminary estimate upward does not cast significant doubt on the intended bid. There is no dispute that Keating's total electrical bid was sufficient to cover the required work; indeed, Keating's bid cost for the electrical work is virtually identical to Shoemaker's.

Further, it is clear from Keating's final estimating worksheet that Keating's claimed error had an effect on the calculation of the cost of bonding and insurance. Where a bid mistake has a specifically calculable effect on the bid calculation and that effect can be determined by a formula evident from the worksheets, the intended bid may be ascertained by taking into account the effects of the error on other bid calculations, such as bonding and insurance costs, based on the mistaken entry. Continental Heller Corp., B-230559, June 14, 1988, 88-1 CPD Para. 571. Keating has calculated its increased costs on the corrected bid using the same percentage calculations for bonding (.63 percent) and insurance (.58 percent) as it used in preparing its original bid, resulting in a total of $65,700 in increased costs on the corrected bid. As corrected, Keating's bid is $1,304,300 lower than Shoemaker's next low bid, a margin of nearly 3 percent. Contrary to the protester's contention, such a margin is not so small as to preclude upward correction. See Sam Gonzales, Inc., B-216728, Feb. 1, 1985, 85-1 CPD Para. 125; G.N. Constr., Inc., B-209641, June 2, 1983, 83-1 CPD Para. 598. We conclude that upward correction of Keating's bid was appropriate.

The protest is denied.

/1/ Keating's site electrical work was one component of the entire electrical portion of its bid; the other component was the buildings electrical work. Each component was set forth in separate entries on the firm's final estimate worksheet.