Skip to main content

B-174608, FEB 11, 1972, 51 COMP GEN 503

B-174608 Feb 11, 1972
Jump To:
Skip to Highlights

Highlights

NOTWITHSTANDING THAT ALTHOUGH THE PRELIMINARY ESTIMATE SHEETS WERE INITIALED AND DATED TO INDICATE WHEN AND BY WHOM PREPARED AND CHECKED. REPRESENT ACTUAL SUBBIDS OR ESTIMATES AND SUBSTANTIATES THE ENTRIES WERE MADE BEFORE BID SUBMISSION. 1972: REFERENCE IS MADE TO LETTER 134G DATED DECEMBER 21. THE ABSTRACT OF BIDS SHOWS THAT SIX BIDS WERE RECEIVED RANGING FROM $17. THE LOWEST BID WAS SUBMITTED BY THE DONOVAN CONSTRUCTION COMPANY. THE GOVERNMENT'S ESTIMATE FOR THE WORK WAS $19. DONOVAN WAS REQUESTED TO SUBMIT ALL SUPPORTING EVIDENCE AND ON DECEMBER 7. ALSO SUBMITTED WERE THE AFFIDAVITS OF ELEVEN EMPLOYEES WHO JOINTLY PREPARED THE WORKSHEETS. THE TOTAL OF THESE PRICES IS SHOWN ON THE SHEET AS BEING $15.

View Decision

B-174608, FEB 11, 1972, 51 COMP GEN 503

BIDS - MISTAKES - CORRECTION - STILL LOWEST BID AN ERROR IN ADDITION OF THE SUBCONTRACT COLUMN ON THE FINAL SUMMARY AND ESTIMATE SHEET OF A BID SUBMITTED UNDER AN INVITATION ISSUED FOR THE CONSTRUCTION OF A VETERANS ADMINISTRATION HOSPITAL ADDITION MAY BE CORRECTED AND THE BID STILL THE LOW BID CONSIDERED FOR AWARD, NOTWITHSTANDING THAT ALTHOUGH THE PRELIMINARY ESTIMATE SHEETS WERE INITIALED AND DATED TO INDICATE WHEN AND BY WHOM PREPARED AND CHECKED, THE FINAL SUMMARY AND ESTIMATE SHEET DOES NOT CONTAIN SUCH INFORMATION SINCE THE DOCUMENTARY EVIDENCE SUBMITTED TO PROVE ERROR INDICATES THE FIGURES INSERTED IN THE FINAL SUMMARY AND ESTIMATE SHEET, PARTICULARLY THE ERASED AND REENTERED FIGURES, REPRESENT ACTUAL SUBBIDS OR ESTIMATES AND SUBSTANTIATES THE ENTRIES WERE MADE BEFORE BID SUBMISSION, AND THE EVIDENCE ESTABLISHING BOTH THE MISTAKE AND THE ACTUAL BID INTENDED MEETS THE REQUIREMENTS FOR CORRECTION OF AN ERROR IN BID PRICE PRIOR TO AWARD.

TO THE ADMINISTRATOR, VETERANS ADMINISTRATION, FEBRUARY 11, 1972:

REFERENCE IS MADE TO LETTER 134G DATED DECEMBER 21, 1971, WITH ENCLOSURES, FROM THE DIRECTOR, SUPPLY SERVICE, DEPARTMENT OF MEDICINE AND SURGERY, FURNISHING A REPORT RELATIVE TO THE PROTEST OF ROBERT E. MCKEE, INC., AGAINST THE CORRECTION OF THE BID SUBMITTED BY THE DONOVAN CONSTRUCTION COMPANY OF MINNESOTA, UNDER AN INVITATION FOR BIDS COVERING SPECIFICATION NO. 6912R-AE, PROJECT NO. 02-5140.

THE INVITATION, ISSUED BY W. C. KRUGER AND ASSOCIATES AND ELMO K. LATHROP AND ASSOCIATES, A JOINT VENTURE, ON BEHALF OF THE VETERANS ADMINISTRATION, REQUESTED BIDS, TO BE OPENED NOVEMBER 24, 1971, FOR FURNISHING MATERIALS AND LABOR AND PERFORMING ALL WORK NECESSARY FOR THE CONSTRUCTION OF A 328- BED ADDITION AT THE VETERANS ADMINISTRATION HOSPITAL, PHOENIX, ARIZONA. THE ABSTRACT OF BIDS SHOWS THAT SIX BIDS WERE RECEIVED RANGING FROM $17,520,000 TO $20,046,000. THE LOWEST BID WAS SUBMITTED BY THE DONOVAN CONSTRUCTION COMPANY. THE GOVERNMENT'S ESTIMATE FOR THE WORK WAS $19,834,000.

ON NOVEMBER 26, 1971, THE OFFICE OF CONSTRUCTION RECEIVED A TELEGRAM FROM DONOVAN ALLEGING THAT AN ERROR IN ADDITION IN THE AMOUNT OF $450,000 HAD BEEN MADE IN ADDING THE SUBCONTRACT COLUMN ON THE FINAL SUMMARY AND ADJUSTMENT SHEET USED IN PREPARATION OF ITS BID. ON NOVEMBER 30, 1971, DONOVAN WAS REQUESTED TO SUBMIT ALL SUPPORTING EVIDENCE AND ON DECEMBER 7, 1971, DONOVAN SUBMITTED ALL THE ORIGINAL WORKSHEETS, INCLUDING THE FINAL SUMMARY AND ADJUSTMENT SHEET. ALSO SUBMITTED WERE THE AFFIDAVITS OF ELEVEN EMPLOYEES WHO JOINTLY PREPARED THE WORKSHEETS. THE FINAL SUMMARY AND ADJUSTMENT SHEET SHOWS IN THE SUBCONTRACT COLUMN THE PRICES QUOTED BY VARIOUS SUBCONTRACTORS, AS WELL AS PRICES FOR VARIOUS ITEMS OF WORK TO BE ACCOMPLISHED BY THE PRIME CONTRACTOR, DONOVAN. THE TOTAL OF THESE PRICES IS SHOWN ON THE SHEET AS BEING $15,415,540 ALTHOUGH THE CORRECT ARITHMETICAL TOTAL FOR THE PRICES IS $15,865,540, A DIFFERENCE OF $450,000. IN ITS TELEGRAM OF NOVEMBER 24, 1971, DONOVAN REQUESTED THAT ITS BID PRICE FOR THE WORK BE INCREASED BY $450,000 TO $17,970,000.

IT IS DONOVAN'S CONTENTION THAT THE ERROR ON ITS FINAL SUMMARY AND ADJUSTMENT SHEET WAS MADE BY ONE OF ITS ESTIMATORS, MR. WILLIAM F. WILLOUGHBY. IN AN AFFIDAVIT DATED JANUARY 20, 1972, MR. WILLOUGHBY STATES THAT LATE IN THE AFTERNOON ON NOVEMBER 23, 1971, THE DAY BEFORE BID OPENING, HE WAS REQUESTED, AMONG OTHER THINGS, TO RE-ADD THE VARIOUS COLUMNS FOR MATERIAL, LABOR AND SUBCONTRACT COSTS ON THE FINAL SUMMARY AND ADJUSTMENT SHEET AND THAT IN SO DOING HE INEXPLICABLY MADE A $450,000 ERROR IN HIS ADDITION OF THE SUBCONTRACT COLUMN, ERASING THE TOTAL PREVIOUSLY WRITTEN AT THE FOOT OF THAT COLUMN AND INSERTING THE FIGURE OF $15,415,540 IN ITS PLACE. THE AFFIDAVIT FURTHER STATES THAT THIS MISTAKE WAS CARRIED THROUGH THE VARIOUS CALCULATIONS MADE THEREAFTER SO THAT THE DONOVAN BID AS SUBMITTED WAS $450,000 LOWER THAN ACTUALLY INTENDED.

IN HIS REPORT OF DECEMBER 21, 1971, IN WHICH IT IS RECOMMENDED THAT DONOVAN NOT BE PERMITTED TO CORRECT ITS BID PRICE, THE DIRECTOR, SUPPLY SERVICE, STATED THAT THE LABORATORY REPORT RECEIVED FROM THE DIRECTOR, INVESTIGATION AND SECURITY SERVICE, CONFIRMS THE CONTRACTING OFFICER'S FINDINGS THAT "NUMEROUS ALTERATIONS" WERE MADE BY DONOVAN'S EMPLOYEES ON THE FINAL SUMMARY AND ADJUSTMENT SHEET. THE REPORT FURTHER STATES THAT WHILE THE PRELIMINARY ESTIMATE SHEETS HAVE INITIALS AND DATES INDICATING WHEN AND BY WHOM THEY WERE PREPARED AND CHECKED, THE FINAL SUMMARY AND ESTIMATE SHEET DOES NOT CONTAIN SUCH INFORMATION. IN VIEW OF THE OMISSION OF THE FOREGOING INFORMATION FROM THE FINAL SUMMARY AND ADJUSTMENT SHEET, THE DIRECTOR CONCLUDES THAT IT CANNOT BE ESTABLISHED WITH ANY CERTAINTY WHEN THE ERASURES ON THE FINAL SUMMARY AND ADJUSTMENT SHEET WERE MADE AND THAT FOR THIS REASON HE DOES NOT BELIEVE THAT THE FACTS IN THIS CASE ARE SUFFICIENTLY CLEAR TO ESTABLISH SPECIFICALLY WHAT BID WAS INTENDED BY DONOVAN.

IN FURTHER SUPPORT OF THE RECOMMENDATION THAT DONOVAN NOT BE PERMITTED TO CORRECT ITS BID, THE REPORT REFERS TO A PRIOR INVITATION FOR THE SUBJECT WORK WHICH WAS CANCELED BECAUSE OF FUNDING PROBLEMS. UPON RESOLICITATION, THE PROJECT WAS REDESIGNED TO INCLUDE AN AUTOMATIC TRANSPORT SYSTEM TO COST AN ADDITIONAL $1,500,000 TO $2,000,000. THE REPORT STATES IN THIS REGARD THAT WHILE THE WORKSHEETS SHOW THAT DONOVAN ESTIMATED THE COST OF THE AUTOMATIC TRANSPORT SYSTEM TO BE $1,800,000, THE FIRM INCREASED ITS PREVIOUS TOTAL BID PRICE BY ONLY $855,000, WHEREAS MCKEE INCREASED ITS PREVIOUS TOTAL BID PRICE BY $1,386,000. IN THIS CONNECTION, HOWEVER, IT SHOULD BE NOTED THAT BUT FOR THE $450,000 ERROR IN ADDITION CLAIMED TO HAVE BEEN MADE BY DONOVAN, ITS CURRENT TOTAL BID PRICE WOULD HAVE BEEN SOME $1,300,000 MORE THAN ITS PREVIOUS BID, AN INCREASE COMPARABLE TO THAT QUOTED BY MCKEE.

BY LETTER AND TELEGRAM DATED NOVEMBER 30, 1971, MCKEE PROTESTED AGAINST CORRECTION OF DONOVAN'S BID ON THE GROUNDS THAT SUCH ACTION WOULD BE UNFAIR TO MCKEE AND ALL OTHER BIDDERS ON GOVERNMENT PROJECTS. MCKEE STATED THAT IF DONOVAN MADE AN HONEST MISTAKE IN ITS BID, WHEREBY IT IS ENTITLED TO RELIEF, SUCH RELIEF SHOULD BE LIMITED TO PERMITTING IT TO WITHDRAW ITS BID.

OUR OFFICE HAS FREQUENTLY HELD THAT TO PERMIT CORRECTION OF AN ERROR IN BID PRIOR TO AWARD, A BIDDER MUST SUBMIT CLEAR AND CONVINCING EVIDENCE THAT AN ERROR HAS BEEN MADE, THE MANNER IN WHICH THE ERROR OCCURRED AND THE INTENDED BID PRICE. 49 COMP. GEN. 480 (1970). THE SAME BASIC REQUIREMENTS FOR THE CORRECTION OF A BID ARE FOUND IN SECTION 1-2.406- 3(A)(2) OF THE FEDERAL PROCUREMENT REGULATIONS (FPR) WHICH PROVIDES:

A DETERMINATION MAY BE MADE PERMITTING THE BIDDER TO CORRECT HIS BID WHERE THE BIDDER REQUESTS PERMISSION TO DO SO AND CLEAR AND CONVINCING EVIDENCE ESTABLISHES BOTH THE EXISTENCE OF A MISTAKE AND THE BID ACTUALLY INTENDED. ***

WHILE THE DONOVAN FINAL SUMMARY AND ADJUSTMENT SHEET CONTAINS NUMEROUS ERASURES, AS INDICATED IN THE ADMINISTRATIVE REPORT, IT IS CONCEDED BY THE REPORT THAT ERASURES ON A WORKSHEET OF THIS TYPE SHOULD NOT BE CONSIDERED TO BE UNUSUAL. THE IMPORTANT CONSIDERATION IS NOT WHETHER ERASURES HAVE IN FACT BEEN MADE BUT WHETHER IT CAN BE DEMONSTRATED THAT THE ENTRIES IN THE SUBCONTRACT COLUMN OF THE FINAL SUMMARY AND ADJUSTMENT SHEET, PARTICULARLY THOSE WHICH HAVE OBVIOUSLY BEEN ERASED AND REENTERED, WERE, IN FACT, MADE BEFORE BIDS WERE SUBMITTED. IN THIS REGARD, IN ADDITION TO THE FINAL SUMMARY AND ADJUSTMENT SHEET, DONOVAN HAS SUBMITTED A RECAPITULATION OF THE LOW SUBBIDS USED IN THE FORMULATION OF ITS BID, INCLUDING CERTAIN SUBITEMS TO BE PERFORMED BY DONOVAN ITSELF RATHER THAN BY SUBCONTRACTORS. MORE IMPORTANTLY, DONOVAN HAS ALSO SUBMITTED AN EXHIBIT (EXHIBIT 5) CONSISTING OF THE ACTUAL SUBBIDS SUBMITTED BY PROSPECTIVE SUBCONTRACTORS FOR THOSE ITEMS INTENDED TO BE SUBCONTRACTED AND THE INTERNAL ESTIMATES USED TO FORMULATE PRICES FOR THOSE SUBITEMS TO BE SELF-PERFORMED. IN ALL BUT SIX INSTANCES THE FINAL SUBBID PRICES INDICATED ON THE FINAL SUMMARY AND ADJUSTMENT SHEET (AND ALSO ON THE SUBBID RECAPITULATION) ARE SUBSTANTIATED BY THE PAPERS CONTAINED IN EXHIBIT 5. THE SIX ITEMS NOT SUBSTANTIATED DO NOT REPRESENT A SIGNIFICANT DOLLAR AMOUNT WHEN COMPARED TO THE AMOUNT OF THE CLAIMED MISTAKE AND NONE OF THESE SIX ITEMS IS AMONG THE FINAL SUMMARY AND ADJUSTMENT SHEET ENTRIES WHICH WERE ERASED AND REENTERED. ACCORDINGLY, WE BELIEVE THAT THE EXISTENCE OF DOCUMENTARY EVIDENCE INDICATING THAT THE MAJORITY OF THE FIGURES INSERTED IN THE FINAL SUMMARY AND ADJUSTMENT SHEET (PARTICULARLY THOSE FIGURES WHICH HAVE BEEN ERASED AND REENTERED) REPRESENT ACTUAL SUBBIDS OR ESTIMATES IS SUFFICIENT PROOF THAT SUCH ENTRIES WERE, IN FACT, MADE BEFORE SUBMISSION OF THE DONOVAN BID.

WHILE DONOVAN ALLEGES THAT ITS INTENDED BID PRICE FOR THE PROJECT WAS $17,970,000, THIS FIGURE DOES NOT INCLUDE ANY AMOUNT FOR INCREASED MARKUPS FOR "USE TAX AND BOND," "CONTRACTOR'S FEE," OR USE TAX ON THE CONTRACTOR'S FEE. DONOVAN MAINTAINS THAT THE ADDITIONAL AMOUNT FOR MARKUPS WOULD BE $12,449 (MARKUP FOR CONTRACTOR'S FEE AND USE TAX ON FEE ON THE $450,000 MISTAKE). DONOVAN HAS STATED, HOWEVER, THAT IF THE EVIDENCE SUBMITTED BY IT DOES NOT ESTABLISH THE AMOUNT OF THE ADDITIONAL MARKUPS, IT WISHES TO WAIVE ANY CLAIM TO THE AMOUNT COVERING SUCH MARKUPS. WHILE THE FINAL SUMMARY AND ADJUSTMENT SHEET DOES SHOW THAT DONOVAN ADDED CERTAIN AMOUNTS TO ITS SUBTOTAL BID PRICE TO COVER THE AFOREMENTIONED MARKUP ITEMS, SUCH SUMMARY SHEET DOES NOT SHOW THAT FIXED PERCENTAGES WERE USED IN ARRIVING AT THE AMOUNTS OF THE VARIOUS MARKUP ITEMS AND WE THEREFORE CANNOT DETERMINE WITH CERTAINTY WHAT THE AMOUNT OF THE MARKUP ITEMS WOULD HAVE BEEN ABSENT THE MISTAKE.

ACCORDINGLY, THE BID OF DONOVAN SHOULD BE CORRECTED TO SHOW A TOTAL BID PRICE OF $17,982,449 FOR THE PROJECT AND SUCH BID, AS CORRECTED, WHICH WILL BE STILL THE LOWEST BID RECEIVED, SHOULD BE CONSIDERED ALONG WITH THE OTHER BIDS RECEIVED FOR PURPOSES OF MAKING AN AWARD.

GAO Contacts

Office of Public Affairs