B-135558, MARCH 31, 1958, 37 COMP. GEN. 650

B-135558: Mar 31, 1958

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BIDS - MISTAKES - FREIGHT RATES - CORRECTION CORRECTION OF A BID PRICE TO REFLECT A REDUCED FREIGHT RATE WHICH WAS MADE EFFECTIVE ONE MONTH AFTER THE DATE OF BID OPENING UNDER AN INVITATION WHICH PROVIDES THAT THE CONTRACT PRICE IS BASED ON FREIGHT CHARGES IN EFFECT ON DATE OF OPENING IS NOT LEGALLY PERMISSIBLE. 1958: REFERENCE IS MADE TO YOUR LETTER OF MARCH 20. INDICATED THAT IT WAS SUBMITTING ITS BID AS A DOCK OPERATOR AT ESCANABA. IS BASED UPON THE CHARGES IN EFFECT ON DATE OF OPENING OF BIDS. THAT IF AFTER THE CONTRACT DATE ANY TRANSPORTATION CHARTS INCLUDED IN THE CONTRACT PRICE ARE SUBJECT TO AN INCREASE OR DECREASE PROMULGATED BY A GOVERNING REGULATORY BODY. THE COMPANY'S UNIT BID PRICE FOR ITEM 40 WAS REDUCED FROM $10.36 TO $10.31 PER NET TON TO REFLECT THE CORRECTION IN THE FREIGHT RATE.

B-135558, MARCH 31, 1958, 37 COMP. GEN. 650

BIDS - MISTAKES - FREIGHT RATES - CORRECTION CORRECTION OF A BID PRICE TO REFLECT A REDUCED FREIGHT RATE WHICH WAS MADE EFFECTIVE ONE MONTH AFTER THE DATE OF BID OPENING UNDER AN INVITATION WHICH PROVIDES THAT THE CONTRACT PRICE IS BASED ON FREIGHT CHARGES IN EFFECT ON DATE OF OPENING IS NOT LEGALLY PERMISSIBLE.

TO GLENN C. PARMELEE, VETERANS ADMINISTRATION, MARCH 31, 1958:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 20, 1958, WITH ENCLOSURES, FILE 134G, REQUESTING A DECISION AS TO WHETHER THE C. REISS COAL COMPANY, SHEBOYGAN, WISCONSIN, MAY BE PERMITTED TO CORRECT ITS BID OPENED ON FEBRUARY 4, 1958.

IN RESPONSE TO INVITATION NO. M9-1-58, ISSUED JANUARY 13, 1958, BY THE MARKETING DIVISION FOR FUELS, SUPPLY SERVICE, VETERANS ADMINISTRATION, THE C. REISS COAL COMPANY SUBMITTED A BID DATED JANUARY 27, 1958, OFFERING TO FURNISH, AMONG OTHERS, ITEM 40, COVERING AN ESTIMATED 3,445 NET TONS OF BITUMINOUS COAL IN ACCORDANCE WITH THE REQUIREMENTS SET FORTH IN APPLICABLE SCHEDULES, ETC., ON A DELIVERED AND STORED BASIS, TO THE VETERANS ADMINISTRATION HOSPITAL, IRON MOUNTAIN, MICHIGAN, DURING THE PERIOD FROM APRIL 1, 1958, THROUGH MARCH 31, 1959, AT A TOTAL UNIT PRICE OF $10.36 PER NET TON. THE COMPANY PROPOSED TO SHIP THE COAL FROM THE FREEMAN NO. 4 MINE, SHIPPING POINT, HERRIN, ILLINOIS, AND INDICATED THAT IT WAS SUBMITTING ITS BID AS A DOCK OPERATOR AT ESCANABA, MICHIGAN. THE SPACE FOR SHOWING THE FREIGHT RATE APPLICABLE TO ITEM 40, THE COMPANY INSERTED THE FOLLOWING: "$2.76 MINES TO LAKE PORT, INCLUDING DUMPING CHARGE (LESS REFUND).'

PARAGRAPH 6 ( FREIGHT AND TRANSPORTATION CHARGES) OF THE GENERAL PROVISIONS OF THE INVITATION PROVIDES THAT THE CONTRACT PRICE OF THE COAL, IF INCLUSIVE OF TRANSPORTATION CHARGES FROM POINT OF SHIPMENT, IS BASED UPON THE CHARGES IN EFFECT ON DATE OF OPENING OF BIDS, AND THAT IF AFTER THE CONTRACT DATE ANY TRANSPORTATION CHARTS INCLUDED IN THE CONTRACT PRICE ARE SUBJECT TO AN INCREASE OR DECREASE PROMULGATED BY A GOVERNING REGULATORY BODY, THE CONTRACT PRICE OF THE COAL SHIPPED THEREAFTER SHALL BE CORRESPONDINGLY INCREASED OR DECREASED.

BY TELEGRAM DATED FEBRUARY 21, 1958, THE COMPANY ADVISED THAT IT HAD INADVERTENTLY INSERTED IN ITS BID A FREIGHT RATE FOR ITEM 40, WHICH, IT STATED, BECAME EFFECTIVE ON FEBRUARY 15, 1958--- ELEVEN DAYS AFTER THE BID OPENING DATE--- AND THAT THE FREIGHT RATE SHOWN IN ITS BID FOR THAT ITEM SHOULD BE REDUCED BY THE AMOUNT OF $0.05. THE RECORD INDICATES THAT IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH 6 OF THE GENERAL PROVISIONS, THE COMPANY'S UNIT BID PRICE FOR ITEM 40 WAS REDUCED FROM $10.36 TO $10.31 PER NET TON TO REFLECT THE CORRECTION IN THE FREIGHT RATE.

YOU STATE THAT ON MARCH 4, 1958, A REPRESENTATIVE OF THE C. REISS COAL COMPANY CONTACTED THE CHIEF OF THE MARKETING DIVISION FOR FUELS BY TELEPHONE AND INQUIRED AS TO THE STATUS OF THE AWARD ON ITEM 40; THAT THE REPRESENTATIVE WAS ADVISED THAT ALTHOUGH THE AWARD HAD NOT BEEN FINALIZED, THE EVALUATION OF THE BIDS INDICATED THAT HIS COMPANY WAS NOT THE LOW BIDDER AS TO COST PER MILLION B.T.U. ( BRITISH THERMAL UNITS); AND THAT WHEN THE REPRESENTATIVE INQUIRED AS TO WHETHER COGNIZANCE HAD BEEN TAKEN TO THE COMPANY'S TELEGRAM OF FEBRUARY 21, 1958, IN EVALUATING THE BIDS, HE WAS GIVEN AN AFFIRMATIVE ANSWER.

IN A TELEGRAM DATED MARCH 5, 1958, THE COMPANY ADVISED AS FOLLOWS:

REFER OUR BID VETERANS ADMINISTRATION IRON MOUNTAIN ITEM 40 M9-1-58 PD NEW PROPORTION RATE TARIFF OF GARTLAND STEAMSHIP COMPANY BULK CARRIER FROM CHICAGO TO ESCANABA ICC TARIFF NBR 11 EFFECTIVE MARCH 3 PERMITS US TO MODIFY OUR QUOTATION ON COAL ORIGINATING C AND EI RAILROAD PD IN ACCORDANCE WITH GENERAL PROVISIONS NBR 6 OUR PRICE ON FREEMAN ILLINOIS COAL IS REDUCED FROM $10.36 DELIVERED AT HOSPITAL. PD PLEASE ADJUST OUR QUOTATION ACCORDINGLY AND ADVISE

BY TELEGRAM DATED MARCH 10, 1958, THE COMPANY WAS REQUESTED TO SUSTAIN ITS REQUESTED CHANGE IN BID BY FURNISHING DETAILED INFORMATION AS TO THE TARIFFS ON WHICH ITS ORIGINAL BID WAS BASED.

IN A LETTER DATED MARCH 13, 1958, THE COMPANY STATED, IN PART, AS FOLLOWS:

OUR BID ON ITEM 40, CALLING FOR FREEMAN, ILLINOIS COAL SHOWS THE MINE PRICE AS $4.65 A NET TON AT THE MINES; THE FREIGHT RATE OF $2.76 FROM THE MINES TO CHICAGO LAKE PORT, INCLUDING THE DUMPING CHARGES, AFTER DEDUCTING THE REFUND FOR MOVEMENT BEYOND ESCANABA, MAKING OUR ORIGINAL DELIVERED PRICE $10.36 DUMPED AT IRON MOUNTAIN.

OUR FREIGHT RATE, AS STATED ABOVE, WAS INCORRECT AS OF BID DATE AND SUBJECT TO CORRECTION IN ACCORDANCE WITH YOUR METHOD OF AWARD. THE RAILROAD RATE, AS OF BID DATE, WAS $3.145, LESS A REFUND OF 48.5 CENTS FOR SHIPMENT BEYOND PORT CITY, OR A NET OF $2.71, WHICH INCLUDES THE DUMPING CHARGES OF 17.5 CENTS. THIS WOULD MAKE OUR NET DELIVERED PRICE, AS OF BID DATE, $10.31 INSTEAD OF $10.36.

IN MAKING UP OUR BID WE INCORRECTLY USED THE PROPOSED NEW RATE, WHICH WAS TO BECOME EFFECTIVE FEBRUARY 15, 1958. THIS RATE, IFA TARIFF 1-119, IC- 881, ADVANCED 8 CENTS A TON, LESS THE 3 CENTS A TON REFUND FOR SHIPMENT BEYOND, OR A NET INCREASE OF 5 CENTS A TON (REFERRED TO IN OUR TELEGRAM OF FEBRUARY 21, 1958).

EFFECTIVE MARCH 3 A NEW TARIFF, I.C.C. 11, WAS PUBLISHED AND IS A JOINT PROPORTIONAL RATE TARIFF BETWEEN THE CARTLAND STEAMSHIP COMPANY AND THE C AND EI RAILROAD, UNDER WHICH THIS COAL WILL NOW MOVE TO ESCANABA FOR BEYOND. THIS NEW RATE WOULD BE APPLICABLE TO THE MOVEMENT OF THIS COAL AND, THEREFORE, WOULD IN EFFECT, REDUCE OUR PRICE TO A NET OF $9.92 A NET TON DELIVERED AT THE HOSPITAL, IN IRON MOUNTAIN.

UNDER THE NEW JOINT PROPORTIONAL RATE TARIFF, THE RATE FOR THE MOVEMENT FROM THE MINES TO ESCANABA, INCLUDING THE RAILROAD FREIGHT, DUMPING CHARGE AND VESSEL RATE, IS $3.12. THESE ARE THE BREAKDOWNS OF THE QUOTATIONS:

ORIGINAL REVISED GARTLAND

ITEM 40 ICC 881 ICC 881 STEAMSHIP

ICC 11

COAL AND SALES

COMM----------- $4.65 $4.65 $4.65 FREIGHT AND DUMP------ -------- (1) 2.76

(1) 2.71 (1 2) 3.12 LAKE---------------------------- .80 .80 ---------- HANDLING AND CARTAGE----------- 2.15 2.15 2.15

TOTAL--------------------- 10.36 10.31 9.92 (1) DOES NOT INCLUDE 4 CENTS TAX. (2) INCLUDES LAKE TRANSPORTATION.

THE LIST OF BIDS IN YOUR LETTER SHOWS THAT THE FOLLOWING RESPONSIVE BIDS WERE RECEIVED:

PER TON COST PER MILLION

D. AND S. B.T.U. BELL AND ZOLLER COAL COMPANY:

ORIOLE MINE--------------------- $10.29 10.4079

BUCKHORN MINE------------------- 10.09 .4109 THE C. REISS COAL COMPANY:

FREEMAN NO. 4 MINE------------- 10.31 .4188

VOGUE MINE---------------------- 10.51 .4153 NORTH WESTERN-HANNA FUEL CO- ------ 10.65 .4238

YOU STATE THAT IF THE C. REISS COAL COMPANY IS PERMITTED TO CHANGE ITS BID ON THE COAL FROM THE FREEMAN NO. 4 MINE TO $9.96 ($9.92 PLUS $0.04 TRANSPORTATION TAX), IT WOULD RESULT IN A COST PER MILLION B.T.U. OF $0.4077 AND WOULD THUS BECOME THE LOWEST BID.

THE C. REISS COAL COMPANY REQUESTS THAT ITS BID PRICE FOR FREEMAN NO. 4 MINE COAL UNDER ITEM 40 BE CORRECTED TO INCLUDE A FREIGHT RATE WHICH, THE RECORD INDICATES, WAS MADE EFFECTIVE MARCH 3, 1958--- APPROXIMATELY ONE MONTH AFTER THE DATE OF THE BID OPENING. SINCE PARAGRAPH 6 OF THE GENERAL PROVISIONS SPECIFICALLY PROVIDED THAT THE CONTRACT PRICE IS BASED ON THE FREIGHT CHARGES IN EFFECT ON DATE OF OPENING OF BIDS, WE CONCLUDE THAT THERE IS NO LEGAL BASIS FOR PERMITTING THE COMPANY TO MAKE THE REQUESTED SUBSTITUTION OF FREIGHT RATES. FURTHERMORE, IN THE PRESENT CASE THE BIDDER DOES NOT SEEK TO HAVE ITS BID CORRECTED SO AS TO HAVE INCLUDED THEREIN A PREVIOUSLY CALCULATED ITEM WHICH IT ACTUALLY INTENDED TO INCLUDE IN, BUT WHICH WAS INADVERTENTLY OMITTED FROM, THE AMOUNT OF ITS ORIGINAL BID. RATHER IT PROPOSES TO CHANGE AND REDUCE ITS BID BY THE AMOUNT WHICH IT CONSIDERS NECESSARY TO MAKE ITS BID THE LOWEST RECEIVED. THE BASIC RULE IS, OF COURSE, THAT BIDS MAY NOT BE CHANGED AFTER THEY ARE OPENED, AND THE EXCEPTION PERMITTING A BID TO BE CORRECTED UPON SUFFICIENT FACTS ESTABLISHING THAT A BIDDER ACTUALLY INTENDED TO BID AN AMOUNT OTHER THAN SET DOWN ON THE BID FORM, WHERE THE CONTRACTING OFFICER IS ON NOTICE OF THE ERROR PRIOR TO ACCEPTANCE, DOES NOT EXTEND TO PERMITTING A BIDDER TO RECALCULATE AND CHANGE HIS BID TO INCLUDE FACTORS WHICH HE DID NOT HAVE IN MIND WHEN HIS BID WAS SUBMITTED, OR AS TO WHICH HE HAS SINCE CHANGED HIS MIND. TO PERMIT THIS WOULD REDUCE TO A MOCKERY THE PROCEDURE OF COMPETITIVE BIDDING REQUIRED BY LAW IN THE LETTING OF PUBLIC CONTRACTS. SEE 17 COMP. GEN. 575, 577.