B-132315, JUN. 27, 1957

B-132315: Jun 27, 1957

Additional Materials:

Contact:

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

 

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

BONNEVILLE POWER ADMINISTRATION: REFERENCE IS MADE TO YOUR LETTER OF JUNE 21. BIDS WERE REQUESTED FOR FURNISHING LABOR AND MATERIALS AND PERFORMING ALL WORK REQUIRED FOR THE CLEARING AND CONSTRUCTION OF THE BONNEVILLE POWER ADMINISTRATION'S ROUND BUTTE REDMOND 230 KV TRANSMISSION LINE IN JEFFERSON AND DESCHUTES COUNTIES. THE WORK TO BE PERFORMED WAS DIVIDED INTO 48 ITEMS OF WORK FOR THE PURPOSES OF SUBMITTING BIDS AND MAKING PAYMENT. THE THREE OTHER AGGREGATE BIDS ON THE PROJECT WERE IN THE AMOUNTS OF $207. YOU STATE THAT WHEN THE BIDS WERE OPENED IT WAS NOTED THAT THE BID SUBMITTED BY THE COLLINS ELECTRICAL COMPANY. WAS MORE THAN $68. 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.

B-132315, JUN. 27, 1957

TO MR. L. C. STEWART, ACTING CHIEF, BONNEVILLE POWER ADMINISTRATION:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 21, 1957, WITH ENCLOSURES, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR WHICH THE COLLINS ELECTRICAL COMPANY, INC., STOCKTON, CALIFORNIA, ALLEGES IT MADE IN ITS BID OPENED ON JUNE 17, 1957.

BY INVITATION NO. 8425, BIDS WERE REQUESTED FOR FURNISHING LABOR AND MATERIALS AND PERFORMING ALL WORK REQUIRED FOR THE CLEARING AND CONSTRUCTION OF THE BONNEVILLE POWER ADMINISTRATION'S ROUND BUTTE REDMOND 230 KV TRANSMISSION LINE IN JEFFERSON AND DESCHUTES COUNTIES, OREGON. THE WORK TO BE PERFORMED WAS DIVIDED INTO 48 ITEMS OF WORK FOR THE PURPOSES OF SUBMITTING BIDS AND MAKING PAYMENT. IN RESPONSE THE COLLINS ELECTRICAL COMPANY, INC., SUBMITTED A BID, AS AMENDED BY TELEGRAM OF JUNE 17, 1957, OFFERING TO PERFORM THE WORK FOR VARIOUS UNIT AND JOB PRICES SET FORTH OPPOSITE EACH ITEM, WHICH PRODUCED A TOTAL BID OF $130,575. THE THREE OTHER AGGREGATE BIDS ON THE PROJECT WERE IN THE AMOUNTS OF $207,932, $237,711 AND $335,790.

YOU STATE THAT WHEN THE BIDS WERE OPENED IT WAS NOTED THAT THE BID SUBMITTED BY THE COLLINS ELECTRICAL COMPANY, INC., WAS MORE THAN $68,000 BELOW THE GOVERNMENT'S ESTIMATE AND THAT ON JUNE 19, 1957, THE CORPORATION ADVISED BY LETTER THAT IT HAD MADE A SERIOUS ERROR IN COMPUTING ITS BID BY FAILING TO INCLUDE THEREIN THE COST OF EXCAVATING THE POLE HOLES AND THAT IT ESTIMATED THE COST FOR THIS PART OF THE WORK AS BEING $70 PER HOLE, MAKING A TOTAL OF $28,000 FOR 400 HOLES. IN THEIR LETTER DATED JUNE 20, 1957, THE CORPORATION REQUESTED THAT IT EITHER BE ALLOWED TO INCREASE ITS AGGREGATE BID PRICE BY $28,000 OR, IN THE ALTERNATIVE, BE RELEASED FROM ANY OBLIGATION UNDER ITS BID. IN SUPPORT OF ITS ALLEGATION OF ERROR, THE CORPORATION SUBMITTED PHOTOSTATIC COPIES OF ITS ORIGINAL ESTIMATE SHEETS WHICH INDICATE THAT IN COMPUTING ITS BID PRICE THE CORPORATION FAILED TO CONSIDER THE COST OF EXCAVATING THE POLE HOLES.

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 THAT 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 CORPORATION HAS NOT CONCLUSIVELY ESTABLISHED THAT BUT FOR THE ERROR ITS AGGREGATE BID PRICE FOR THE PROJECT WOULD HAVE BEEN $158,575. 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 COLLINS ELECTRICAL COMPANY, INC., AND THE OTHER BIDS AND THE GOVERNMENT ESTIMATE, IT IS APPARENT THAT THE CORPORATION MADE AN ERROR IN ITS BID, AND SINCE THIS FACT WAS ESTABLISHED PRIOR TO AWARD, THE BID OF THE COLLINS ELECTRICAL COMPANY, INC., SHOULD BE DISREGARDED WITHOUT FORFEITURE OF BID SECURITY UNLESS, OF COURSE, THE CORPORATION DESIRES TO PERFORM THE WORK IN STRICT COMPLIANCE WITH THE INVITATION FOR THE AMOUNT OF ITS BID AS ORIGINALLY SUBMITTED.

THE PAPERS, WITH THE EXCEPTION OF THE ABSTRACT OF BIDS, ARE RETURNED.