B-124221, JUN. 16, 1955

B-124221: Jun 16, 1955

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TO THE SECRETARY OF COMMERCE: REFERENCE IS MADE TO YOUR LETTER OF JUNE 6. AS IS USUAL IN PROJECTS OF THE TYPE IN QUESTION. ESTIMATED QUANTITIES WERE SPECIFIED AND BIDDERS REQUIRED TO QUOTE UNIT PRICES FOR EVALUATION ON THE BASIS OF THE TOTAL ESTIMATED COST OF THE QUANTITIES SPECIFIED. WHICH IS A PART OF THE INVITATION. PROVIDES AS FOLLOWS: "5 (D) * * * MODIFICATION BY TELEGRAPH OF BIDS ALREADY SUBMITTED WILL BE CONSIDERED IF RECEIVED PRIOR TO THE TIME FIXED IN THE INVITATION FOR BIDS. TELEGRAPHIC MODIFICATIONS SHALL NOT REVEAL THE AMOUNT OF THE ORIGINAL OR REVISED BID.' "11 (B) THE GOVERNMENT RESERVES THE RIGHT TO WAIVE ANY INFORMALITY IN BIDS RECEIVED WHEN SUCH WAIVER IS IN THE INTEREST OF THE GOVERNMENT.'.

B-124221, JUN. 16, 1955

TO THE SECRETARY OF COMMERCE:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 6, 1955, WITH ENCLOSURES, REQUESTING A DECISION AS TO WHETHER THE BID OF PAUL I. NELSON COMPANY, SUBMITTED IN RESPONSE TO INVITATION FOR BIDS ISSUED BY THE BUREAU OF PUBLIC ROADS FOR THE CONSTRUCTION OF ARIZONA FOREST HIGHWAY NO. 19-B5, AS MODIFIED BY THE BIDDER'S TELEGRAM RECEIVED PRIOR TO BID OPENING, MAY BE CONSIDERED RESPONSIVE.

AS IS USUAL IN PROJECTS OF THE TYPE IN QUESTION, THE ACTUAL QUANTITIES OF MOST KINDS OF WORK TO BE PERFORMED COULD NOT BE ACCURATELY PREDETERMINED AND, THEREFORE, ESTIMATED QUANTITIES WERE SPECIFIED AND BIDDERS REQUIRED TO QUOTE UNIT PRICES FOR EVALUATION ON THE BASIS OF THE TOTAL ESTIMATED COST OF THE QUANTITIES SPECIFIED.

THE INSTRUCTIONS TO BIDDERS (STANDARD FORM 22), WHICH IS A PART OF THE INVITATION, PROVIDES AS FOLLOWS:

"5 (D) * * * MODIFICATION BY TELEGRAPH OF BIDS ALREADY SUBMITTED WILL BE CONSIDERED IF RECEIVED PRIOR TO THE TIME FIXED IN THE INVITATION FOR BIDS. TELEGRAPHIC MODIFICATIONS SHALL NOT REVEAL THE AMOUNT OF THE ORIGINAL OR REVISED BID.'

"11 (B) THE GOVERNMENT RESERVES THE RIGHT TO WAIVE ANY INFORMALITY IN BIDS RECEIVED WHEN SUCH WAIVER IS IN THE INTEREST OF THE GOVERNMENT.'

IN RESPONSE TO THE INVITATION, PAUL I. NELSON COMPANY SUBMITTED A BID ON THE PRESCRIBED FORM, TOTALING $501,309.50 FOR THE VARIOUS ITEMS, AND THERE WAS RECEIVED, PRIOR TO THE BID OPENING, A TELEGRAM AS FOLLOWS: "REGARDS TO THE CLIFTON AND ALPINE HIGHWAY BID OPENING AT TEN AM WE REDUCE OUR BID $13,400.' THE TOTAL BID AS MODIFIED BY THE TELEGRAM IS $487,909.50 AND BECOMES THE LOW BID. THE NEXT LOW BID IS IN THE AMOUNT OF $496,352.

THE QUESTION THUS ARISES AS TO WHETHER THE LUMP-SUM DEDUCTION FROM A BID REQUIRED TO BE SUBMITTED ON A UNIT PRICE BASIS IS RESPONSIVE. AS POINTED OUT IN YOUR LETTER, THERE IS NOTHING IN THE INVITATION WHICH REQUIRES THAT THE MODIFICATION SHOULD BE IN THE SAME FORM AS THE ORIGINAL BID.

WE HAVE HELD THAT A LUMP-SUM DEDUCTION FROM A UNIT-PRICE BID SHOULD NOT BE CONSIDERED WHERE IN OFFERING THE DEDUCTION THE BIDDER RESERVED THE RIGHT TO ALLOCATE OR APPLY THE REDUCTION TO PARTICULAR ITEMS AFTER BID OPENING OR AWARD. THE REASONS FOR THAT RULING ARE ABSENT HERE. EFFECT, A REQUEST FOR UNIT-PRICE BIDS, FOR EVALUATION ON THE BASIS OF ESTIMATED QUANTITIES WITH UNIT RATES TO BE USED FOR ADJUSTMENT IN THE EVENT OF VARIATIONS OF QUANTITIES FROM THE ESTIMATES. SO, THE OFFER OF A LUMP-SUM DEDUCTION AS IN THIS CASE DOES NOT AFFECT THE UNIT RATES STATED, SO FAR AS CONCERNS THE DETERMINATION OF AMOUNTS TO BE PAID OR DEDUCTED BECAUSE OF QUANTITY VARIATIONS, AND WHERE SUCH UNIT RATES ARE NOT OUT OF LINE WITH THOSE QUOTED BY OTHER BIDDERS, WE PERCEIVE NO REASON WHY THE REDUCTION SHOULD NOT BE CONSIDERED AS APPLICABLE TO THE AGGREGATE AMOUNT BID ON THE BASIS OF THE ESTIMATED QUANTITIES, IT BEING NOTED THAT IN THIS CASE THE UNIT RATE QUOTED BY PAUL I. NELSON COMPANY ON ITEM 24, WHICH CONSTITUTES APPROXIMATELY TWO THIRDS OF THE TOTAL ESTIMATED WORK, IS THE LOWEST OFFERED BY ANY BIDDER. FURTHERMORE, IT DOES NOT APPEAR THAT SUCH LUMP-SUM DEDUCTION COULD POSSIBLY BE PREJUDICIAL TO THE OTHER BIDDERS IN THIS CASE. IN VIEW OF SUCH CIRCUMSTANCES, THE BID OF PAUL I. NELSON COMPANY AS MODIFIED BY THE TELEGRAM MAY BE CONSIDERED AS RESPONSIVE TO THE INVITATION.

IF THE BID BE ACCEPTED, THE LUMP-SUM DEDUCTION SHOULD BE APPLIED AGAINST THE TOTAL AMOUNT BID, IN LIEU OF ATTEMPTING TO REDUCE ALL UNIT PRICES PROPORTIONATELY; AND IT IS SUGGESTED THAT THE AMOUNT OF THE LUMP-SUM DEDUCTION SHOULD BE WITHHELD FROM PAYMENTS OTHERWISE DUE IN SUCH MANNER AS TO HAVE BEEN FULLY COVERED BY THE TIME THE CONTRACT WORK IS APPROXIMATELY 50 PERCENT COMPLETE, IN FAIRNESS TO BOTH THE CONTRACTOR AND THE GOVERNMENT.