B-164886, DEC. 6, 1968

B-164886, DEC. 6, 1968

TO MATHEWS ELECTRICAL SERVICE:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 19, 1968, REQUESTING RECONSIDERATION OF OUR DECISION OF SEPTEMBER 11, 1968, DENYING YOUR PROTEST AGAINST THE ADMINISTRATIVE DETERMINATION ALLOWING CORRECTION OF ANDY ELECTRIC COMPANY'S BID SUBMITTED PURSUANT TO INVITATION NO. DACA01-68 -B-0044.

THE PRIMARY BASIS FOR YOUR REQUEST FOR RECONSIDERATION IS YOUR BELIEF THAT THE REGULATIONS PERMITTING CORRECTION OF MISTAKES IN BIDS ARE WRONG, AND SHOULD BE CHANGED BECAUSE THEY ALLOW AN UNETHICAL PERSON AN UNDUE ADVANTAGE.

YOU FURTHER STATE THAT YOU AGREE WITH THE FACTS AS SET FORTH IN OUR DECISION AND THAT THE REGULATIONS WERE PROPERLY FOLLOWED. YOU AGAIN POINT OUT THAT UNDER SUCH REGULATIONS A BIDDER COULD EASILY BUILD A MISTAKE INTO HIS BID AND HAVE HIS PRICE ADJUSTED UPWARDS AFTER BID OPENING OR BE ABLE TO WITHDRAW HIS BID. SINCE THE SUBSTANCE OF YOUR REQUEST FOR RECONSIDERATION IS NOT DIRECTED TO THE DECISION ITSELF, WE WILL NOT RESTATE THE FACTS.

IN SUPPORT OF THE SUPPLEMENTING RULES AND REGULATIONS SET FORTH IN THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), THE SUPREME COURT HAS HELD THAT THE GOVERNMENT ENJOYS UNRESTRICTED POWER TO PRODUCE ITS OWN SUPPLIES, TO DETERMINE WITH WHOM IT MAY DEAL, AND TO FIX THE TERMS AND CONDITIONS UPON WHICH IT WILL MAKE NEEDED PURCHASES. PERKINS V LUKENS STEEL CO., 310 U.S. 113. THIS POWER MUST OF COURSE BE EXERCISED BY INDIVIDUAL AGENTS, AND THE CONGRESS HAS BY APPROPRIATE LEGISLATION PRESCRIBED THE MANNER IN WHICH IT SHALL BE EXERCISED, PROVIDED STANDARDS AND PROCEDURES, AND PLACED CERTAIN LIMITATIONS UPON THE AUTHORITY OF THE GOVERNMENT'S AGENTS. SUCH STATUTORY REQUIREMENTS, HOWEVER, ARE FOR THE PROTECTION OF THE GOVERNMENT AND NOT FOR THE BENEFIT OF THOSE DEALING WITH IT. SEE AMERICAN SMELTING AND REFINING COMPANY V U.S., 259 U.S. 75.

WITH RESPECT TO THE HANDLING OF ALLEGATIONS OF MISTAKES IN BIDS, WE BELIEVE THAT THE GUIDE LINES AND PROCEDURES ESTABLISHED BY EXISTING REGULATIONS ARE ADEQUATE TO PROTECT ALL BIDDERS AGAINST ARBITRARY ADMINISTRATIVE ACTION. THE BASIC PROPOSITION THAT A BIDDER MAY BE PERMITTED TO WITHDRAW A BID UPON PROOF OF ERROR IS MADE NECESSARY BY THE REQUIREMENT THAT BIDDERS ON GOVERNMENT PROCUREMENTS MUST ALLOW THEIR BIDS TO REMAIN OPEN FOR A STATED MINIMUM PERIOD AFTER BID OPENING, DURING WHICH THEY CANNOT WITHDRAW OR REVOKE THEM AT WILL. SEE REFINING ASSOCIATES, INC. V UNITED STATES, 124 CT. CL. 115. HOWEVER, THE LAW IS CLEAR THAT A BIDDER CANNOT BE BOUND BY AN ACCEPTANCE OF HIS BID WHEN THE PARTY ACCEPTING IT IS ON NOTICE, EITHER ACTUAL OR CONSTRUCTIVE, THAT THE BID DOES NOT, BY REASON OF ERROR, STATE THE TRUE INTENT OF THE BIDDER. PERMITTING THE BID TO BE WITHDRAWN OR DISREGARDED IS THUS NECESSARY TO AVOID THE MAKING OF UNENFORCEABLE AWARDS, AND THE REQUIREMENT OF PROOF OF ERROR SERVES TO PREVENT BIDDERS FROM TENDERING HASTY OR CARELESS OR IRRESPONSIBLE BIDS WITH THE IDEA THAT THEY MAY BE WITHDRAWN AT WILL.

CORRECTION, RATHER THAN WITHDRAWAL, OF AN ERRONEOUS BID IS ALONG ESTABLISHED PRACTICE IN PROPER CASES SANCTIONED BY THE ACCOUNTING OFFICERS OF THE GOVERNMENT AS A JUSTIFIABLE MEANS OF PREVENTING THE LOSS TO THE GOVERNMENT OF A POTENTIALLY ADVANTAGEOUS BID. SINCE CORRECTION IS NEVER PERMITTED WHERE ITS EFFECT WOULD BE TO DISPLACE ANOTHER BID (UNLESS THE CORRECT AMOUNT IS CLEARLY ASCERTAINABLE FROM THE FACT OF THE BID), THE PROPRIETY OF PERMITTING CORRECTION IS ESSENTIALLY A MATTER BETWEEN THE BIDDER AND THE GOVERNMENT (SEE 42 COMP. GEN. 723, 725) AND THE INTERESTS OF OTHER BIDDERS, WHO WOULD NOT BE IN LINE FOR AWARD UNLESS THE BID IN QUESTION WERE REJECTED, ARE NOT CONSIDERED TO BE SUCH AS TO ENTITLE THEM TO PARTICIPATE AS ADVERSARY PARTIES IN THIS PURELY ADMINISTRATIVE DETERMINATION, ALTHOUGH THEY ARE PERMITTED TO APPLY FOR AND OBTAIN REVIEW BY OUR OFFICE OF THE ADMINISTRATIVE ACTION.

OUR OFFICE RECOGNIZED THE SERIOUSNESS OF THESE MATTERS WHEN GRANTING AUTHORITY, SUBJECT TO OUR REVIEW, TO THE CHIEF OF ENGINEERS, AND OTHER HEADS OF PROCURING AGENCIES, TO DECIDE CERTAIN TYPES OF CASES INVOLVING ERRORS IN BIDS ALLEGED PRIOR TO AWARD. SEE ASPR 2-406.3 (B) (1).

WE SHARE YOUR CONCERN THAT UNSCRUPULOUS BIDDERS NOT BE ALLOWED TO USE THE MISTAKE IN BID PROCEDURE TO OBTAIN AN UNDUE ADVANTAGE OVER THE GOVERNMENT OR THE OTHER BIDDERS. ON THE OTHER HAND, BASED ON THE FOREGOING LEGAL ANALYSIS, WE DO NOT BELIEVE THE COURTS WOULD PERMIT THE ENFORCEMENT OF A CONTRACT ON THE BASIS OF A BID KNOWN BY THE CONTRACTING OFFICER PRIOR TO AWARD TO HAVE BEEN SUBMITTED IN ERROR; AND BID CORRECTION, WE BELIEVE, IS APPROPRIATE UNDER THE RULES TO PROTECT THE INTERESTS OF THE GOVERNMENT. ACCORDINGLY, IN OUR VIEW, THE MOST FEASIBLE SOLUTION IS TO RETAIN THE PRESENT RULES AND TO USE OUR REVIEW AUTHORITY TO INSURE THAT THOSE RULES ARE STRICTLY AND PROPERLY APPLIED.