B-172900, DEC 21, 1971

B-172900, DEC 21, 1971

CONTRACT - MISTAKE IN BID - CORRECTION DENIED DECISION REGARDING THE PROTEST OF THE MCCARTY CORPORATION AGAINST THE REFUSAL OF THE FORT WORTH DISTRICT, CORPS OF ENGINEERS, TO GRANT A REQUEST TO CORRECT AN ALLEGED MISTAKE IN BID, AND THE AWARD OF A CONTRACT TO ANOTHER BIDDER, UNDER AN IFB ISSUED FOR THE CONSTRUCTION OF A CENTRAL CHILLING PLANT AND AIR CONDITIONING FOR 32 EXISTING BUILDINGS AT SHEPPARD AFB, TEXAS. ALTHOUGH GAO DOES NOT BELIEVE THAT THE CONTRACTING OFFICER ACTED UNREASONABLY IN MAKING THE AWARD, HIS ACTIONS WERE ERRONEOUS. IN B 172240(2), JUNE 10, 1971, IT WAS HELD THAT PARAGRAPH 8 OF THE ADDITIONAL INSTRUCTIONS, READ IN CONJUNCTION WITH PARAGRAPHS 5(B) AND 10(C) OF STANDARD FORM 22, PRECLUDES THE GOVERNMENT FROM MAKING AN AWARD ON ANY BASIS OTHER THAN THE TOTAL BID PRICE FOR THE ENTIRE SCHEDULE. THEREFORE, IT HAS BEEN CONCLUDED THAT MCCARTY'S BID PRICE WAS $674,000, AND AWARD SHOULD HAVE BEEN MADE TO THEM. HOWEVER, SINCE CONSTRUCTION WORK HAS ALREADY PROGRESSED TO A CONSIDERABLE DEGREE, AND RECOGNIZING THAT THE CONTRACTING OFFICER CANNOT BE SAID TO HAVE ACTED UNREASONABLY, TERMINATION OF THE CONTRACT WOULD NOT BE IN THE BEST INTEREST OF THE GOVERNMENT.

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER DATED JUNE 4, 1971, WITH ENCLOSURES, FROM THE DEPUTY GENERAL COUNSEL, OFFICE OF THE CHIEF OF ENGINEERS, FURNISHING A REPORT ON THE PROTEST OF THE MCCARTY CORPORATION (MCCARTY) AGAINST THE REFUSAL OF THE PROCUREMENT ACTIVITY TO GRANT ITS REQUEST TO CORRECT AN ALLEGED MISTAKE IN BID, AND AGAINST THE AWARD TO ANOTHER BIDDER UNDER INVITATION FOR BIDS DACA63-71-B-0096, ISSUED BY THE FORT WORTH DISTRICT CORPS OF ENGINEERS.

THE INVITATION CALLED FOR THE CONSTRUCTION OF A CENTRAL CHILLING PLANT BUILDING AND AIR CONDITIONING FOR 32 EXISTING BUILDINGS AT SHEPPARD AIR FORCE BASE, TEXAS. THE SINGLE BIDDING SCHEDULE SET OUT IN THE INVITATION CONSISTED OF THREE BID ITEMS WITH SPACES FOR THE INSERTION OF PRICES FOR EACH ITEM AND A SPACE FOR THE TOTAL PRICE FOR ALL ITEMS. THE SCHEDULE ALSO CONTAINED THE FOLLOWING CAVEAT: "NOTE: BIDDERS MUST BID ON ALL ITEMS."

EIGHT BIDS WERE RECEIVED AND OPENED MARCH 15, 1971. THE TWO LOWEST BIDDERS AND THEIR RESPECTIVE BID PRICES WERE AS FOLLOWS:

THE MCCARTY CORPORATION ITEM NO. 1 $140,000

ITEM NO. 2 443,000

ITEM NO. 3 100,000

TOTAL $674,000

MORRIS PLUMBING CO., INC. ITEM NO. 1 $155,000

ITEM NO. 2 389,000

ITEM NO. 3 137,000

TOTAL $690,000

IMMEDIATELY AFTER BID OPENING, THE PROCUREMENT ACTIVITY BEGAN THE PROCESS OF CHECKING AND ABSTRACTING BIDS. INCLUDED IN THIS PROCESS WAS THE ADDING OF THE BID ITEMS AND, IN DOING SO, IT WAS DISCOVERED THAT BOTH MCCARTY AND MORRIS PLUMBING CO., INC., (MORRIS) HAD APPARENTLY INCORRECTLY ADDED THEIR INDIVIDUAL BID ITEM PRICES. AS A RESULT, THE TOTAL OF THE INDIVIDUAL BID ITEMS OF THE MCCARTY BID WAS INCREASED FROM $674,000 TO $683,000 AND THE TOTAL FOR THE INDIVIDUAL BID ITEMS OF THE MORRIS BID WAS DECREASED FROM $690,000 TO $681,000 TO CORRESPOND TO THE TOTALS OF THE ITEM PRICES AS ADDED BY THE PROCUREMENT OFFICIALS. THEREAFTER, THE PROCUREMENT ACTIVITY ADVISED MCCARTY THAT DUE TO THE ERRORS IN ADDITION CONTAINED IN EACH OF THE TWO BIDS, MORRIS HAD DISPLACED MCCARTY AS LOW BIDDER AND THAT MCCARTY WAS NOW SECOND LOW BIDDER.

IN RESPONSE TO THIS, MCCARTY, BY LETTER OF MARCH 15, 1971, ALLEGED THAT ITS BID TOTAL OF $674,000 WAS CORRECT; THAT ITS INTENDED BID PRICE FOR ITEM NO. 2 WAS $434,000 RATHER THAN $443,000; AND THAT THE MISTAKE WAS DUE TO AN OBVIOUS TRANSPOSITION OF FIGURES. WITH ITS LETTER, MCCARTY SUBMITTED DOCUMENTARY EVIDENCE CONSISTING OF AFFIDAVITS AND ITS WORK SHEETS IN SUPPORT OF ITS ALLEGATIONS OF ERROR.

BY LETTER OF MARCH 16, 1971, MORRIS ADVISED THE PROCUREMENT ACTIVITY THAT A CLERICAL MISTAKE HAD BEEN MADE IN THE TOTAL OF $690,000 LISTED IN ITS BID AND THE PROPER TOTAL WAS $681,000. THE LETTER ALSO REQUESTED THAT SUCH BID, AS CORRECTED, BE ACCEPTED UNDER THE TERMS OF THE INVITATION.

ON APRIL 9, 1971, THE CONTRACTING OFFICER ISSUED A FINDINGS AND FACT CONCERNING MCCARTY'S ALLEGATION OF MISTAKE IN BID IN WHICH HE STATED THAT, ON THE BASIS OF THE WORK PAPERS AND OTHER EVIDENCE SUBMITTED BY MCCARTY, IT WAS CLEARLY ESTABLISHED THAT MCCARTY HAD MADE A MISTAKE IN BID AND IT WAS CLEAR THAT ITS INTENDED BID FOR ITEM NO. 2 WAS $434,000 SO THAT THE TOTAL OF $674,000 STATED IN ITS BID WAS CORRECT. THE CONTRACTING OFFICER WENT ON TO STATE, HOWEVER, THAT WHILE MCCARTY HAD CLEARLY ESTABLISHED THE EXISTENCE OF ITS MISTAKE AND THE ACTUALLY INTENDED BID, TO ALLOW IT TO CORRECT ITS BID WOULD DISPLACE MORRIS AS THE LOW BIDDER CONTRARY TO THE REQUIREMENTS OF ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2- 406.3(A)(3). THAT PARAGRAPH PRECLUDES SUCH A CORRECTION UNLESS THE EXISTENCE OF THE MISTAKE AND THE BID ACTUALLY INTENDED ARE ASCERTAINABLE SUBSTANTIALLY FROM THE INVITATION AND THE BID ITSELF. ACCORDINGLY, MCCARTY'S REQUEST FOR CORRECTION WAS DENIED AS ITS BIDDING SCHEDULE FAILED TO PROVIDE ANY CONCRETE EVIDENCE OF ITS INTENDED BID. THEREAFTER, ON MAY 6, 1971, THE CONTRACT WAS AWARDED TO MORRIS.

WE APPRECIATE THE BASIS UPON WHICH MCCARTY'S REQUEST FOR CORRECTION WAS DENIED AND DO NOT BELIEVE THAT THE CONTRACTING OFFICER ACTED UNREASONABLY IN THE CIRCUMSTANCES. HOWEVER, WE BELIEVE IT TO BE THE BETTER VIEW THAT MCCARTY'S INTENDED BID WAS APPARENT ON THE FACE OF BIDDING DOCUMENTS SUBMITTED WITHOUT NECESSITY FOR RESORT TO EXTRANEOUS EVIDENCE. IN THIS REGARD, THE IFB AS ISSUED INCLUDED STANDARD FORM 22, INSTRUCTIONS TO BIDDERS. PARAGRAPH 5(B) THEREOF PROVIDES IN PERTINENT PART THAT "WHERE THE BID FORM EXPLICITLY REQUIRES THAT THE BIDDER BID ON ALL ITEMS, FAILURE TO DO SO WILL DISQUALIFY THE BID."

PARAGRAPH 10(C) OF STANDARD FORM 22 PROVIDES AS FOLLOWS:

"(C) THE GOVERNMENT MAY ACCEPT ANY ITEM OR COMBINATION OF ITEMS OF A BID UNLESS PRECLUDED BY THE INVITATION FOR BIDS OR THE BIDDER INCLUDES IN HIS BID A RESTRICTIVE LIMITATION."

THE IFB ALSO INCLUDED ADDITIONAL INSTRUCTIONS TO BE READ IN CONJUNCTION WITH THE STANDARD FORM 22 INSTRUCTIONS. PARAGRAPH 8 OF SUCH ADDITIONAL INSTRUCTIONS READS AS FOLLOWS:

"8. GOVERNMENTS PRIVILEGE IN MAKING AWARDS.

THE GOVERNMENT FURTHER RESERVES THE RIGHT TO MAKE AWARD OF ANY OR ALL SCHEDULES OF ANY BID, UNLESS THE BIDDER QUALIFIES SUCH BID BY SPECIFIC LIMITATION; ALSO TO MAKE AWARD TO THE BIDDER WHOSE AGGREGATE BID ON ANY COMBINATION OF BID SCHEDULES IS LOW. FOR THE PURPOSE OF THIS INVITATION FOR BIDS, THE WORD 'ITEM' AS USED IN PARAGRAPH 10(C) OF STANDARD FORM 22 SHALL BE CONSIDERED TO MEAN 'SCHEDULE'."

RECENTLY OUR OFFICE HAS CONSIDERED THE EFFECT OF PARAGRAPH 8 OF THE ADDITIONAL INSTRUCTIONS UPON PARAGRAPHS 5(B) AND 10(C) OF STANDARD FORM 22 IN THE SITUATION SUCH AS INVOLVED HERE. IN B-172240(2), JUNE 10, 1971, WE HELD THAT PARAGRAPH 8 OF THE ADDITIONAL INSTRUCTIONS, READ IN CONJUNCTION WITH PARAGRAPHS 5(B) AND 10(C) OF STANDARD FORM 22, PRECLUDES THE GOVERNMENT FROM MAKING AWARD ON ANY BASIS OTHER THAN THE TOTAL BID PRICE FOR THE ENTIRE SCHEDULE.

IN VIEW OF THE INVITATION ADVICE THAT AWARD WAS TO BE MADE ONLY ON A TOTAL BID PRICE, OR AGGREGATE, BASIS, THERE WOULD HAVE BEEN NO LOGICAL REASON FOR MCCARTY TO QUOTE A SCHEDULE TOTAL PRICE LOWER THAN THE SUM OF ITS ITEM PRICES, AS MIGHT BE THE CASE WHERE AWARD COULD BE MADE EITHER IN THE AGGREGATE OR ON AN ITEM BASIS. SINCE THE MCCARTY TOTAL WAS IN ERROR, IT APPEARED AT FIRST BLUSH, THAT A MISTAKE HAD OCCURRED EITHER IN THE TOTAL ITSELF OR IN THE ITEMS MAKING UP THE TOTAL. HOWEVER, UPON CLOSER ANALYSIS OF THE FIGURES INVOLVED, THE POSSIBILITY OF THE TOTAL ITSELF HAVING BEEN IN ERROR IS SO REMOTE AS TO MAKE IT UNREASONABLE, IN OUR VIEW, TO USE SUCH POSSIBILITY AS A BASIS FOR RESOLVING THE ISSUE INVOLVED. THINK, UNDER THE CIRCUMSTANCES OF THIS CASE, WHERE THE TOTAL BID HAS BEEN VERIFIED BY THE BIDDER AS CORRECT AND THERE COULD BE NO PURPOSE SERVED BY DELIBERATE UNDERSTATMENT OF THE CORRECT TOTAL, THAT THE PROBABILITY OF THE ERROR HAVING OCCURRED AS A TRANSPOSITION OF $443,000 FOR THE INTENDED $434,000 IS SUFFICIENTLY GREAT TO SUPPORT WITH NOTHING MORE A CONCLUSION THAT THE ERROR WAS, IN FACT, SO MADE.

UPON REVIEW OF THE EVIDENCE BEFORE US WE MUST CONCLUDE THAT MCCARTY'S BID PRICE WAS $674,000, THE FIGURE INSERTED AS THE TOTAL PRICE FOR THE BIDDING SCHEDULE, AND THAT AWARD OF THE CONTRACT SHOULD HAVE BEEN MADE TO MCCARTY, ASSUMING THAT MCCARTY WAS OTHERWISE ACCEPTABLE AS A PROSPECTIVE CONTRACTOR.

HOWEVER, SINCE CONSTRUCTION WORK HAS PROGRESSED TO A CONSIDERABLE DEGREE AND RECOGNIZING THAT THE CONTRACTING OFFICER CANNOT BE SAID TO HAVE ACTED UNREASONABLY IN THE FIRST INSTANCE, WE DO NOT BELIEVE THAT TERMINATION OF THE CONTRACT WOULD BE IN THE BEST INTEREST OF THE GOVERNMENT.

THE ENCLOSURES RECEIVED WITH THE ADMINISTRATIVE REPORT DATED JUNE 4, 1971, ARE RETURNED.