B-129575, OCT. 30, 1956

B-129575, OCT. 30, 1956

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO LETTER DATED OCTOBER 22, 1956, WITH ENCLOSURES, FROM THE ACTING QUARTERMASTER GENERAL, U.S. MARINE CORPS, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN BY YOUR DEPARTMENT IN CONNECTION WITH A MISTAKE ALLEGED BY THE CONSOLIDATED DIESEL ELECTRIC CORPORATION TO HAVE BEEN MADE IN A BID SUBMITTED BY THAT CONCERN IN RESPONSE TO INVITATION NO. 63, ISSUED BY THE COMMANDANT, MARINE CORPS UNDER DATE OF SEPTEMBER 13, 1956. IT IS UNDERSTOOD THAT NO AWARD HAS YET BEEN MADE.

THE INVITATION REQUESTED BIDS FOR FURNISHING 202 ELECTRIC GENERATOR SETS UNDER ITEM NO. 1, 404 INSTRUCTION BOOKS UNDER ITEM NO. 2, AND 404 ENG-8 MAINTENANCE PARTS PAMPHLETS UNDER ITEM NO. 3 OF THE BID SCHEDULE. BIDDERS WERE ADVISED IN PARAGRAPH 1 OF THE TERMS AND CONDITIONS OF THE INVITATION FOR BIDS THAT A UNIT PRICE FOR EACH ITEM BID ON SHOULD BE SHOWN; THAT A TOTAL SHOULD BE ENTERED IN THE AMOUNT COLUMN OF THE SCHEDULE FOR EACH ITEM BID ON; AND THAT "IN CASE OF ERROR IN EXTENSION OF PRICE, THE UNIT PRICE WILL GOVERN.'

THE ABSTRACT OF BIDS SHOWS THAT 7 BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION AND THAT THE THREE LOWEST BIDS RECEIVED, WHEN EVALUATED IN ACCORDANCE WITH THE TERMS OF THE INVITATION, WERE SUBMITTED BY O. E. SZEKELY AND ASSOCIATES, INC., STEWART AND STEVENSON SERVICES, INC., AND THE CONSOLIDATED DIESEL ELECTRIC CORPORATION, IN THE ORDER LISTED. IT IS REPORTED THAT THE LOW BID OF O. E. SZEKELY AND ASSOCIATES, INC., IS NOT RESPONSIVE TO THE INVITATION NOT ONLY FROM THE STANDPOINT OF MEETING THE DELIVERY SCHEDULE BUT ON THE BASIS OF TECHNICAL EVALUATIONS.

BY LETTER DATED OCTOBER 16, 1956, THE CONSOLIDATED DIESEL ELECTRIC CORPORATION NOTIFIED THE MARINE CORPS THAT IN COMPARING THE ABSTRACT OF BIDS WITH ITS BID IT FOUND THAT ITS BID AS LISTED IN THE ABSTRACT WAS $18,093.14 IN EXCESS OF THE AMOUNT IT HAD BID; THAT ALTHOUGH ITS TOTAL PRICES FOR ITEMS 2 AND 3 DID NOT AGREE WITH THE UNIT PRICES, THE TOTAL PRICES WERE THE CORRECT ONES, AND THAT THE UNIT PRICES SHOULD BE ONE HALF OF THE AMOUNTS QUOTED, OR $26.30 AND $18.48, INSTEAD OF $52.61 AND $36.96, RESPECTIVELY. IT IS CLAIMED THAT THE INSERTION OF INCORRECT UNIT PRICES WAS THE RESULT OF DIVIDING THE TOTAL EXTENDED PRICES BY 202 UNITS SPECIFIED UNDER ITEM NO. 1 RATHER THAN 404 UNITS CALLED FOR UNDER EACH OF ITEMS 2 AND 3. IT IS CLAIMED ALSO THAT THE UNIT PRICES FOR ITEMS 2 AND 3 ARE OUT OF LINE WITH THE OTHER BIDS ON THOSE ITEMS. TO FURTHER SUBSTANTIATE THE BIDDER'S ALLEGATION OF ERROR THERE WERE FURNISHED COPIES OF PRICE QUOTATIONS FROM ITS SUPPLIERS TOGETHER WITH WHAT IT STATED TO BE A COPY OF ITS WORK SHEET USED IN PREPARING ITS BID.

IF THE UNIT PRICES FOR ITEMS 2 AND 3 BE REDUCED BY ONE HALF AND THE BID BE EVALUATED ON THAT BASIS THE TOTAL AMOUNT OF CONSOLIDATED'S BID WOULD BE REDUCED BY SOME $18,000, WHICH WOULD RESULT IN MAKING THIS BID LOWER THAN THAT OF STEWART AND STEVENSON SERVICES, INC.

WHILE CONSOLIDATED'S UNIT PRICES ON ITEMS 2 AND 3 ARE IN EXCESS OF THE UNIT PRICES QUOTED BY THE OTHER BIDDERS, THAT FACT IS NOT NOW MATERIAL, SINCE ACTUAL NOTICE OF THE ERROR CLAIMED WAS GIVEN BY THE BIDDER PRIOR TO AWARD. THE FACT REMAINS THAT ALL BIDDERS WERE ON NOTICE THAT "IN CASE OF ERROR IN EXTENSION OF PRICE, THE UNIT PRICE WILL GOVERN.' IF, AS CLAIMED, CONSOLIDATED COMPUTED ITS BID BY FIRST DETERMINING ITS TOTAL PRICES AND THEN NEGLIGENTLY COMPUTING THE UNIT PRICES FOR ITEMS 2 AND 3 ON THE BASIS OF INCORRECT QUANTITIES, ITS ERROR WAS THE RESULT SOLELY OF ITS OWN NEGLIGENCE AND NO REASON IS APPARENT WHY IT SHOULD PROFIT THEREBY, OR WHY THE INSTRUCTIONS TO ALL BIDDERS SHOULD BE DISREGARDED IN EVALUATING THE BID.

MOREOVER, AS WE HAVE STATED MANY TIMES, THE QUESTION WHETHER A BIDDER MAY BE PERMITTED TO CHANGE A BID--- AFTER THE BIDS HAVE BEEN OPENED--- BECAUSE OF AN ERROR THEREIN ALWAYS PRESENTS A MATTER OF SERIOUS CONCERN AND THE INTERESTS OF BOTH THE GOVERNMENT AND OTHER BIDDERS RESPONDING TO THE INVITATION MUST BE TAKEN INTO CONSIDERATION. IN CASES WHERE AN ERROR IS ALLEGED PRIOR TO AWARD BY A BIDDER, AND EVIDENCE IS SUBMITTED TO ESTABLISH CLEARLY THAT AN ERROR WAS IN FACT MADE, THE ACCEPTANCE OF THE BID AS MADE WOULD NOT CREATE A VALID AND BINDING CONTRACT, SINCE SUCH ACCEPTANCE COULD NOT BE MADE IN GOOD FAITH. ON THAT BASIS WE HAVE BEEN GENERALLY LIBERAL IN PERMITTING THE WITHDRAWAL OF SUCH BIDS. HOWEVER, EXCEPT IN THOSE VERY EXCEPTIONAL CASES WHERE THE BASIS FOR THE ERROR AND THE INTENDED BID PRICE CAN BE DETERMINED FROM THE INVITATION AND THE BID ITSELF, WE HAVE RESTRICTED THE CORRECTION OF ERRONEOUS BIDS TO THOSE CASES WHERE THE ERRONEOUS BID WAS ALREADY THE LOWEST RECEIVED AND THE CORRECTION PERMITTED WOULD NOT AFFECT THE RELATIVE POSITION OF THE BIDDER WITH RESPECT TO OTHERS. IN SUCH CASES IT HAS BEEN OUR POSITION THAT THE CORRECTION IS A MATTER ENTIRELY BETWEEN THE LOW BIDDER AND THE GOVERNMENT, AND THAT THE INTEREST OF THE GOVERNMENT IN OBTAINING THE BEST PRICES LEGITIMATELY AVAILABLE IS SUPERIOR TO THE INTEREST OF ANY HIGHER BIDDER IN HAVING ALL ERRONEOUS BIDS DISREGARDED, NO MATTER HOW CONCLUSIVELY IT MIGHT APPEAR THAT THE LOWER BIDDER ACTUALLY INTENDED A DIFFERENT BID. WHERE, AS IN THIS CASE, THE REQUESTED CORRECTION WOULD RESULT IN THE CORRECTED BID BECOMING LOWER THAN ONE OR MORE OTHER BIDS WHICH WERE LOWER THAN THE BID ORIGINALLY SUBMITTED BY THE ERRING BIDDER, THE MATTER CAN NO LONGER BE CONSIDERED AS ONE INVOLVING ONLY THE GOVERNMENT AND THE BIDDER, BUT MUST BE RECOGNIZED AS ONE OF DIRECT AND VITAL CONCERN TO THE BIDDERS WHOSE RELATIVE STANDING WOULD BE AFFECTED BY THE CORRECTION. HAVING DUE REGARD FOR ALL THE INTERESTS INVOLVED, WE FEEL THAT TO ALLOW RELIEF IN A CASE SUCH AS THIS, WHERE THE ERRING BIDDER'S POSITION IS BROUGHT ABOUT SOLELY BY ITS OWN NEGLIGENCE, NOT ONLY WOULD SERIOUSLY IMPAIR THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM UPON WHICH THE GOVERNMENT MUST RELY TO A GREAT EXTENT IN MAKING PURCHASES OF ITS SUPPLIES, BUT ALSO COULD OPEN THE DOOR TO FRAUDULENT PRACTICES BY MAKING IT POSSIBLE FOR A BIDDER DELIBERATELY TO SUBMIT AN ERRONEOUS BID WITH THE SECRET INTENTION OF ALLEGING AND ESTABLISHING AN ERROR AFTER OPENING OF BIDS IF HIS BID WAS NOT LOW AND IT WAS TO HIS ADVANTAGE TO DO SO.

WE ACCORDINGLY CONCLUDE THAT, UNDER THE CIRCUMSTANCES IN THIS CASE, THE BID OF CONSOLIDATED MAY NOT BE CORRECTED.

THE PAPERS WITH THE EXCEPTION OF THE LETTER OF OCTOBER 22, 1956, AND THE INVITATION FOR BIDS ARE RETURNED HEREWITH.