B-130398, JAN. 29, 1957

B-130398: Jan 29, 1957

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THE LETTER INDICATES THAT BIDS WERE OPENED ON JANUARY 10. THE ALLEGATION WAS SUPPORTED BY ORIGINAL WORKSHEETS. INDICATES THAT THE BID SHOULD HAVE BEEN INCREASED FOR SUCH TRANSPORTATION BY $21. TO THIS WAS ADDED A FIGURE OF $15. 000 WHICH IS DESCRIBED BY WALKER-MOODY IN THE LETTER OF JANUARY 14 AS "AN ARBITRARY OVERHEAD AND PROFIT ITEM.'. THERE IS NO EXPLANATION OF HOW THE OVERHEAD AND PROFIT ITEM WAS ARRIVED AT. IT IS REASONABLE TO ASSUME THAT THE AMOUNT WOULD VARY DIRECTLY WITH THE SIZE OF THE COST ITEM. 000 IS INCREASED IN PROPORTION TO THE INCREASE IN COST REPRESENTED BY THE TRANSPORTATION ITEM. THE WALKER-MOODY BID IS NO LONGER LOW. IT HAS NOT BEEN CLEARLY ESTABLISHED THAT THE OVERALL OVERHEAD AND PROFIT ITEM WOULD NOT HAVE BEEN HIGHER HAD THE AMOUNT REPRESENTING TRANSPORTATION NOT BEEN OMITTED FROM THE ORIGINAL COMPUTATION.

B-130398, JAN. 29, 1957

TO COMMANDANT, U.S. COAST GUARD:

A LETTER DATED JANUARY 18, 1957, REFERENCE FS-1, FROM THE ACTING COMPTROLLER FORWARDS FOR OUR DECISION A REQUEST FROM F. J. MICHALSON, CONTRACTING OFFICER, 14TH COAST GUARD DISTRICT, FOR INSTRUCTIONS AS TO THE DISPOSITION OF THE BID SUBMITTED BY WALKER-MOODY CONSTRUCTION COMPANY, D., PURSUANT TO INVITATION FOR BIDS NO. 45-57 FOR THE CONSTRUCTION OF A LORAN STATION AT JOHNSTON ISLAND.

THE LETTER INDICATES THAT BIDS WERE OPENED ON JANUARY 10, 1957. SOON AFTER OPENING, AND PRIOR TO AWARD, AN OFFICER OF WALKER-MOODY, THE APPARENT LOW BIDDER, TELEPHONED THE CONTRACTING OFFICER TO ADVISE HIM THAT AN ERROR HAD BEEN MADE IN THEIR BID. WALKER-MOODY, BY LETTERS OF JANUARY 10 AND JANUARY 14, ALLEGED THAT THE COST OF TRANSPORTING EQUIPMENT AND MATERIALS TO JOHNSTON ISLAND HAD BEEN INADVERTENTLY OMITTED. THE ALLEGATION WAS SUPPORTED BY ORIGINAL WORKSHEETS, ONE OF WHICH, IDENTIFIED BY THE BIDDER AS WORKSHEET C, INDICATES THAT THE BID SHOULD HAVE BEEN INCREASED FOR SUCH TRANSPORTATION BY $21,735, COMPUTED ON THE BASIS OF TWO TRIPS AT $10,350 EACH PLUS 5 PERCENT ($1,035) REPRESENTING OVERHEAD AND PROFIT. THE WORKSHEETS FURTHER SHOW THAT WALKER-MOODY HAD ORIGINALLY ESTIMATED THEIR COSTS FOR THE PROJECT (EXCEPT FOR THE TRANSPORTATION ITEM) AT $122,979. TO THIS WAS ADDED A FIGURE OF $15,000 WHICH IS DESCRIBED BY WALKER-MOODY IN THE LETTER OF JANUARY 14 AS "AN ARBITRARY OVERHEAD AND PROFIT ITEM.' THERE IS NO EXPLANATION OF HOW THE OVERHEAD AND PROFIT ITEM WAS ARRIVED AT. HOWEVER, IT IS REASONABLE TO ASSUME THAT THE AMOUNT WOULD VARY DIRECTLY WITH THE SIZE OF THE COST ITEM. SINCE THE ADDITION OF THE TRANSPORTATION CHARGE WOULD INCREASE THE COST ITEM IT WOULD APPEAR THAT THE OVERHEAD AND PROFIT ITEM WOULD ALSO BE INCREASED. IF IN LIEU OF THE 5 PERCENT FOR OVERHEAD AND PROFIT ADDED TO THE TRANSPORTATION ITEM, THE OVERALL OVERHEAD AND PROFIT OF $15,000 IS INCREASED IN PROPORTION TO THE INCREASE IN COST REPRESENTED BY THE TRANSPORTATION ITEM, THE WALKER-MOODY BID IS NO LONGER LOW. SEE 18 COMP. GEN. 142. IT HAS NOT BEEN CLEARLY ESTABLISHED THAT THE OVERALL OVERHEAD AND PROFIT ITEM WOULD NOT HAVE BEEN HIGHER HAD THE AMOUNT REPRESENTING TRANSPORTATION NOT BEEN OMITTED FROM THE ORIGINAL COMPUTATION.

SINCE THE PRICE INTENDED BY THE BIDDER HAS NOT BEEN CONCLUSIVELY ESTABLISHED BY COMPETENT EVIDENCE, THERE APPEARS TO BE NO BASIS FOR INVOKING THE EXCEPTION TO THE GENERAL RULE THAT BIDS MAY NOT BE MODIFIED AFTER OPENING. 35 COMP. GEN. 279; 17 COMP. GEN. 575. HOWEVER, SINCE THE ERROR IN BID WAS REASONABLY ESTABLISHED PRIOR TO AWARD, THE BID OF WALKER- MOODY MAY BE DISREGARDED. 36 COMP. GEN. 441.