B-127737, MAY 4, 1956

B-127737: May 4, 1956

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

TO THE SECRETARY OF THE INTERIOR: REFERENCE IS MADE TO A LETTER DATED APRIL 26. THE WORK TO BE PERFORMED WAS DIVIDED INTO VARIOUS ITEMS OF WORK FOR THE PURPOSE OF SUBMITTING BIDS AND MAKING PAYMENT. THE BID OF THE WILLIAMS EQUIPMENT COMPANY WAS NOT FORWARDED HERE BUT IT APPEARS FROM THE ABSTRACT OF BIDS THAT THE COMPANY QUOTED A TOTAL AGGREGATE BID PRICE OF $1. THE FOUR OTHER AGGREGATE BIDS ON THE PROJECT WERE IN THE AMOUNTS OF $1. 363.28 AND THE GOVERNMENT ESTIMATE OF THE COST OF THE WORK WAS $1. IT IS UNDERSTOOD INFORMALLY THAT ON APRIL 13. A CONFERENCE WAS HELD WITH MR. ON PAGE 5 UNDER THE HEADING SUMMARY THE AVERAGE COST FOR THE UNIT WAS OBTAINED AT ?7592. THIS AVERAGE COST FIGURE WAS FOR DIRECT COSTS ONLY AND DID NOT INCLUDE SUCH ITEMS AS ENGINEERING.

B-127737, MAY 4, 1956

TO THE SECRETARY OF THE INTERIOR:

REFERENCE IS MADE TO A LETTER DATED APRIL 26, 1956, WITH ENCLOSURES, FROM THE ADMINISTRATIVE ASSISTANT SECRETARY, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR THE WILLIAMS EQUIPMENT COMPANY, FAIRBANKS, ALASKA, ALLEGES IT MADE IN ITS BID OPENED ON APRIL 10, 1956.

THE ALASKA ROAD COMMISSION, JUNEAU, ALASKA, BY INVITATION DATED MARCH 16, 1956, REQUESTED BIDS FOR THE FURNISHING OF MATERIALS AND LABOR AND PERFORMING THE WORK REQUIRED FOR THE CLEARING AND DRAINAGE OF 37.519 MILES OF NEW ROAD AND CONSTRUCTION OF A 156-FOOT BY 20-FOOT, 3-SPAN I-BEAM BRIDGE, SECTION B OF THE DENALI HIGHWAY, ALASKA. THE WORK TO BE PERFORMED WAS DIVIDED INTO VARIOUS ITEMS OF WORK FOR THE PURPOSE OF SUBMITTING BIDS AND MAKING PAYMENT. THE BID OF THE WILLIAMS EQUIPMENT COMPANY WAS NOT FORWARDED HERE BUT IT APPEARS FROM THE ABSTRACT OF BIDS THAT THE COMPANY QUOTED A TOTAL AGGREGATE BID PRICE OF $1,219,031.18 FOR THE PROJECT. THE FOUR OTHER AGGREGATE BIDS ON THE PROJECT WERE IN THE AMOUNTS OF $1,661,332.15, $2,156,073.80, $2,199,132.37, AND $2,475,363.28 AND THE GOVERNMENT ESTIMATE OF THE COST OF THE WORK WAS $1,608,098.91.

IT IS UNDERSTOOD INFORMALLY THAT ON APRIL 13, 1956, THE WILLIAMS EQUIPMENT COMPANY ADVISED BY TELEPHONE AND TELEGRAM THAT AN ERROR OF $149,400 HAD BEEN MADE IN COMPUTING ITS BID PRICE FOR UNCLASSIFIED EXCAVATION FOR BORROW, CASE 1, COVERED BY ITEM 26/1), AND THAT ON APRIL 18, 1956, A CONFERENCE WAS HELD WITH MR. WILLIAMS, OWNER OF THE WILLIAMS EQUIPMENT COMPANY, FOR THE PURPOSE OF DISCUSSING THE ERROR IN THE COMPANY'S BID.

IN AN AFFIDAVIT DATED APRIL 19, 1956, MR. WILLIAMS STATES:

"THE MISTAKE OCCURRED IN ONE OF THESE DIRT ITEMS NAMELY 26/1), UNCLASSIFIED EXCAVATION FOR BORROW, CASE 1. THIS ITEM AND 24/1) (UNCLASSIFIED EXCAVATION) COMPRISE APPROXIMATELY 90 PERCENT OF THE COST OF THE ENTIRE CONTRACT. PAGES 4, 4A AND 5 OF THE WORK SHEETS PERTAIN TO THE ITEM WHERE THE MISTAKE OCCURRED. ON PAGE 4 THE TOURNAPULL COST HAD BEEN ESTIMATED AT ?775 PER CUBIC YARD ON SINGLE SHIFT AND ?58, DOUBLE SHIFT. ON PAGE 5 UNDER THE HEADING SUMMARY THE AVERAGE COST FOR THE UNIT WAS OBTAINED AT ?7592, OR AS BY THE PRACTICE OF ROUNDING OFF TO THE NEAREST CENT ABOVE, ?76. THIS AVERAGE COST FIGURE WAS FOR DIRECT COSTS ONLY AND DID NOT INCLUDE SUCH ITEMS AS ENGINEERING, MOVE IN, MOVE OUT, CAMP COSTS, BOND, INSURANCE, OVERHEAD, CONTINGENCIES AND OVERRIDE. THESE INDIRECT COSTS HAD BEEN ESTIMATED AT 30 PERCENT OF THE DIRECT COSTS, OR ?23.

"IN PREPARING THE FINAL BID SHEET AFFIANT BY ERROR TOOK THE FIGURE OF .58 APPEARING ON PAGE 4 AS THE UNIT PRICE FIGURE INSTEAD OF USING THE FIGURE OF ?76 FROM PAGE 5 AND APPLYING THE 30 PERCENT FACTOR.

"THE CORRECT FIGURE SHOULD HAVE BEEN ?76 PLUS ?23 EQUALS ?99 LESS THE AMOUNT BID FOR ITEM 28/2), WHICH IS INCLUDED IN THE ?99 FIGURE BUT WHICH WAS REQUIRED TO BE BID SEPARATELY. THIS DEDUCTION REDUCES THE CORRECT UNIT PRICE OF 26/1) TO ?94 AND IS THE CORRECTION HERE SOUGHT TO BE MADE. THESE COMPUTATIONS ARE SHOWN ON EXHIBIT B ATTACHED HERETO.

"AS EVIDENCE OF THE CORRECT FIGURE SHEETS 2 AND 3 OF EXHIBIT A RELATE TO ITEM 24/1). AT THE BOTTOM OF P. 3 IS THE FIGURE OF " .408" REPRESENTING THE DIRECT COST OF THIS ITEM. 30 PERCENT ADDED TO THE ROUNDED FIGURE GIVES THE ROUNDED PRICE OF ?54, WHICH IS THE BID PRICE FOR THAT ITEM. THIS METHOD WAS CONSISTENTLY USED THROUGHOUT.'

MR. WILLIAMS REQUESTED IN HIS AFFIDAVIT THAT THE UNIT PRICE OF ITEM 26/1) BE INCREASED FROM $0.58 TO $0.94 PER CUBIC YARD TO COVER THE ALLEGED OMITTED INDIRECT COSTS OR, IN THE ALTERNATIVE, THAT HE BE PERMITTED TO WITHDRAW HIS BID ON THE PROJECT WITHOUT FORFEITURE OF BID SECURITY. SUPPORT OF ITS ALLEGATION OF ERROR, THE COMPANY SUBMITTED PHOTOSTATIC COPIES OF THE ESTIMATE SHEETS USED IN COMPUTING ITS BID AND A REVISED ESTIMATE SHEET ON THE ITEM ON WHICH ERROR WAS ALLEGED.

ONE OF THE PURPOSES OF THE STATUTORY REQUIREMENT OF ADVERTISING FOR BIDS IN MATTERS OF THIS TYPE IS TO SECURE TO ALL QUALIFIED BUSINESS CONCERNS AN EQUAL OPPORTUNITY FOR OBTAINING CONTRACTS WITH THE GOVERNMENT, THEREBY ELIMINATING ANY POSSIBILITY OF CHARGES OF FAVORITISM AND COLLUSION IN THE AWARD OF GOVERNMENT CONTRACTS. TO THAT END, IT HAS CONSISTENTLY BEEN HELD BY OUR OFFICE AND THE COURTS THAT--- EXCEPT IN CERTAIN CASES INVOLVING OBVIOUS ERROR WHERE THE INTENDED BID IS CONCLUSIVELY ESTABLISHED--- BIDDERS SHOULD NOT BE PERMITTED TO VARY THEIR PROPOSALS AFTER THE BIDS ARE OPENED, IT BEING CONSIDERED THAT THE PRESERVATION OF THE COMPETITIVE-BID SYSTEM IS INFINITELY MORE IN THE PUBLIC INTEREST THAN OBTAINING AN APPARENTLY PECUNIARY ADVANTAGE IN A PARTICULAR CASE. AS WAS SAID BY THE COURT IN CITY OF CHICAGO V. MOHR, 216 ILL. 320, 74 N.E. 1056 "WHEN A BID IS PERMITTED TO BE CHANGED (AFTER THE OPENING), IT IS NO LONGER THE SEALED BID SUBMITTED IN THE FIRST INSTANCE, AND, TO SAY THE LEAST, IS FAVORITISM, IF NOT FRAUD--- A DIRECT VIOLATION OF THE LAW--- AND CANNOT BE TOO STRONGLY CONDEMNED.'

IN THE PRESENT CASE THE COMPANY HAS NOT CONCLUSIVELY ESTABLISHED THAT BUT FOR THE ERROR ITS BID PRICE FOR ITEM 26/1) WOULD HAVE BEEN $0.94 PER CUBIC YARD. THE RECORD PRESENTED IS THEREFORE NOT CONSIDERED SUFFICIENT TO WARRANT A DEPARTURE FROM THE BASIC RULE THAT BIDS MAY NOT BE CHANGED AFTER THE BIDS HAVE BEEN OPENED. SEE 17 COMP. GEN. 575 AND 23 ID. 596, 599. HOWEVER, IN VIEW OF THE WIDE DISPARITY BETWEEN THE BID OF THE WILLIAMS EQUIPMENT COMPANY AND THE OTHER BIDS AND THE GOVERNMENT ESTIMATE, IT IS APPARENT THAT THE COMPANY MADE AN ERROR IN ITS BID, AND SINCE THIS FACT WAS ESTABLISHED PRIOR TO AWARD, THE BID OF THE WILLIAMS EQUIPMENT COMPANY SHOULD BE DISREGARDED WITHOUT FORFEITURE OF BID SECURITY UNLESS, OF COURSE, THE COMPANY DESIRES TO PERFORM THE WORK IN STRICT COMPLIANCE WITH THE INVITATION FOR THE AMOUNT OF ITS BID AS ORIGINALLY SUBMITTED.