B-140430, SEPTEMBER 11, 1959, 39 COMP. GEN. 185

B-140430: Sep 11, 1959

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AFTER A REQUEST FOR VERIFICATION BECAUSE THE UNUSUALLY LOW UNIT PRICES IN A BID FOR A CONSTRUCTION PROJECT DID NOT AGREE WITH THE EXTENDED PRICE WHICH WAS MORE IN LINE WITH PRICES QUOTED BY OTHER BIDDERS. ALLEGES THAT THE UNIT PRICES WERE CORRECT BUT THAT THE EXTENDED PRICE SHOULD BE REDUCED. HAS PLACED HIMSELF IN THE POSITION OF HAVING AN OPPORTUNITY FOR A SECOND GUESS AFTER BIDS ARE OPENED WHICH WOULD ADVERSELY AFFECT THE COMPETITIVE BIDDING SYSTEM AND BE PREJUDICIAL TO OTHER BIDDERS. DENIAL OF CORRECTION OF THE BID WAS PROPER. WHICH ARE MORE IN LINE WITH OTHER BIDS AND WHO ON REQUEST FOR VERIFICATION. ALLEGES THAT THE UNIT PRICES WERE CORRECT BUT THAT THE EXTENDED AMOUNTS SHOULD BE REDUCED.

B-140430, SEPTEMBER 11, 1959, 39 COMP. GEN. 185

BIDS - MISTAKES - UNIT PRICE V. EXTENSION DIFFERENCES - OBVIOUS UNIT PRICE ERROR A BIDDER WHO, AFTER A REQUEST FOR VERIFICATION BECAUSE THE UNUSUALLY LOW UNIT PRICES IN A BID FOR A CONSTRUCTION PROJECT DID NOT AGREE WITH THE EXTENDED PRICE WHICH WAS MORE IN LINE WITH PRICES QUOTED BY OTHER BIDDERS, ALLEGES THAT THE UNIT PRICES WERE CORRECT BUT THAT THE EXTENDED PRICE SHOULD BE REDUCED, THEREBY MAKING HIS BID THE LOWEST BID RECEIVED, HAS PLACED HIMSELF IN THE POSITION OF HAVING AN OPPORTUNITY FOR A SECOND GUESS AFTER BIDS ARE OPENED WHICH WOULD ADVERSELY AFFECT THE COMPETITIVE BIDDING SYSTEM AND BE PREJUDICIAL TO OTHER BIDDERS, EVEN THOUGH THE INVITATION PROVIDES THAT IN CASE OF VARIATION BETWEEN THE UNIT PRICE AND THE EXTENSION THE UNIT PRICE WOULD GOVERN; THEREFORE, DENIAL OF CORRECTION OF THE BID WAS PROPER. A BIDDER WHO SUBMITS A BID WITH UNUSUALLY LOW UNIT PRICES WHICH DO NOT AGREE WITH THE EXTENDED AMOUNTS, WHICH ARE MORE IN LINE WITH OTHER BIDS AND WHO ON REQUEST FOR VERIFICATION, ALLEGES THAT THE UNIT PRICES WERE CORRECT BUT THAT THE EXTENDED AMOUNTS SHOULD BE REDUCED, THEREBY MAKING HIS BID THE LOW BID, MAY NOT BE REGARDED AS HAVING SUBMITTED AN UNBALANCED BID IN VIEW OF THE OBVIOUS ERROR ON THE FACE OF THE BID; AND, THEREFORE, CORRECTION WAS PROPERLY DENIED.

TO SMITH, SWIFT, CURRIE AND MCGHEE, SEPTEMBER 11, 1959:

REFERENCE IS MADE TO YOUR LETTERS OF AUGUST 12 AND 19, 1959, WITH ENCLOSURES, PROTESTING ON BEHALF OF A. C. SAMFORD, INC., AGAINST THE DECISION OF THE CHIEF, CORPS OF ENGINEERS, IN DIRECTING THE AWARD OF A CONTRACT TO THE FIVE BORO CONSTRUCTION CORPORATION UNDER INVITATION FOR BIDS NO. ENG-09-133-59-59, DATED MAY 1, 1959.

THE INVITATION REQUESTED BIDS UNDER UNIT PRICE SCHEDULE NO. VI FOR THE CONSTRUCTION OF NIKE-HERCULES FACILITIES AT TURNER AIR FORCE BASE DEFENSE AREA, GEORGIA. BIDDERS WERE ADVISED THAT THEY MUST QUOTE PRICES ON ALL OF THE 124 ITEMS OF WORK, AND THAT IN THE CASE OF A VARIATION BETWEEN THE UNIT PRICE AND THE EXTENSION, THE UNIT PRICE WILL GOVERN. THE TWO LOWEST OF THE NINE BIDS RECEIVED AND OPENED ON MAY 26, 1959, WERE THOSE OF FIVE BORO IN THE TOTAL AMOUNT OF $1,368,605.68, AND SAMFORD IN THE TOTAL AMOUNT OF $1,372,030. AS TO THE SAMFORD BID ON ITEMS 119 AND 120, IT APPEARED TO THE CONTRACTING OFFICER THAT OBVIOUS ERROR HAD BEEN MADE. THE BID AS TO ITEMS 119, 120, AND 121 WAS AS FOLLOWS:

TABLE ITEM QUANTITY UNIT UNIT ESTIMATED

PRICE AMOUNT 120 24 FOOT GATE-------- -- 2 EACH--- 9.14 1,828.00 120 25 FOOT GATE----------- 2 EACH--- 9.14 1,828.00 121 12 FOOT GATE----------- 2 EACH---800.00 1,600.00

FIVE BORO'S BID ON ITEMS 119 AND 120 WAS $600 EACH, OR A TOTAL OF $1,200 FOR EACH TYPE OF GATE SPECIFIED. OTHER BIDS ON THESE ITEMS RANGED FROM $550 EACH TO $652 EACH. AT THE REQUEST OF THE DISTRICT ENGINEER, SAMFORD WAS REQUESTED TO VERIFY ITS BID. SAMFORD VERIFIED ITS $9.14 UNIT PRICE, BUT ADVISED THAT THE EXTENSIONS OF $1,828 WERE ERRONEOUS AND SHOULD BE CORRECTED TO $18.28. IF THE UNIT PRICE OF $9.14 AS EXTENDED TO $18.28 FOR ITEMS 119 AND 120 WERE REGARDED AS ACCEPTABLE, THE TOTAL CORRECTED BID OF SAMFORD IN THE AMOUNT OF $1,368,410.56 WOULD HAVE BEEN LOWER THAN THE BID OF FIVE BORO. IT IS REPORTED THAT THE CONTRACTING OFFICER ORIGINALLY RECOMMENDED THIS CORRECTION ON THE BASIS OF THE INVITATION PROVISION THAT UNIT PRICES GOVERN, BUT SUBSEQUENTLY RECOMMENDED AWARD TO FIVE BORO RATHER THAN CORRECTION OF THE SAMFORD BID EXTENSION. THE DETERMINATION TO DENY CORRECTION OF THE PRICE EXTENSIONS OF ITEMS 119 AND 120 WAS MADE BY THE CHIEF OF ENGINEERS AFTER CONSIDERING THE PROTEST OF FIVE BORO AGAINST CONSIDERATION OF SAMFORD'S BID IF CORRECTED. THE BASIS OF SUCH DENIAL IS STATED IN 2D ENDORSEMENT, DATED JUNE 17, 1959, FROM THE ASSISTANT CHIEF OF ENGINEERS FOR MILITARY CONSTRUCTION TO THE DIVISION ENGINEER, ATLANTA, GEORGIA, AS FOLLOWS:

1. PROTEST OF FIVE BORO CONSTRUCTION CO. HAS BEEN FULLY CONSIDERED. THE UNIT PRICES OF $9.14 EACH SUBMITTED BY A. C. SAMFORD, INC. FOR ITEMS 119 AND 120 ARE SO LOW AS TO BE OBVIOUSLY ERRONEOUS AND CANNOT BE ACCEPTED AS THE INTENDED BID. 35 COMP. GEN. 33. THEREFORE THERE IS NO BASIS FOR ALTERING THE EXTENDED BID PRICES FOR THESE ITEMS.

2. ON THE BASIS OF THE ABOVE THE PROTEST OF FIVE BORO CONSTRUCTION CO. IS VALID. ACCORDINGLY THE SAMFORD SHOULD BE CONSIDERED WITHOUT ALTERATION OF THE EXTENDED PRICES FOR ITEMS 119 AND 120.

CONTRACT NO. DA-09-133-ENG-3678 WAS AWARDED TO FIVE BORO ON AUGUST 6, 1959, IN THE TOTAL ESTIMATED AMOUNT OF $1,368,605.68.

THE CIRCUMSTANCES APPEAR ANALOGOUS TO THOSE CONSIDERED IN OUR DECISION REPORTED AT 35 COMP. GEN. 33, IN THAT IN BOTH INSTANCES THE UNIT PRICES WERE OBVIOUSLY IN ERROR (INSOFAR AS THE COST OF THE ITEMS WAS CONCERNED) AND THE TOTAL PRICES REPRESENTED A REASONABLE FIGURE FOR THE ITEMS. THAT DECISION WE STATED THAT:

OBVIOUSLY, IN OUR OPINION, BIDDERS WOULD NOT BE COMPETING UPON A COMMON BASIS IF, AFTER OPENING OF THE BIDS, THE OSTENSIBLE LOW BIDDER WERE PLACED IN THE FAVORABLE POSITION OF EITHER BEING ABLE TO WITHDRAW ITS BID, CLAIM AND OBTAIN A CORRECTION IN ITS BID PRICES OR INSIST UPON THE CORRECTNESS OF ITS BID PRICES WITHOUT SUBMITTING CONCLUSIVE EVIDENCE IN SUPPORT OF ITS CONTENTION THAT ITS QUOTATIONS OF RIDICULOUSLY LOW PRICES WERE AS ORIGINALLY INTENDED.

UNDOUBTEDLY, IF YOU HAD SO DESIRED, YOU COULD HAVE MAINTAINED THAT YOUR UNIT PRICES ON SUBITEMS (B) AND (C) OF ITEM 33 WERE INCORRECT, BUT THAT MIGHT NOT HAVE BEEN TO THE ADVANTAGE OF YOUR COMPANY SINCE IT WOULD NOT THEN HAVE QUALIFIED AS THE LOW BIDDER. ON THE OTHER HAND, IF THE CORRECTION OF YOUR BID WOULD NOT HAVE RESULTED IN MAKING YOUR TOTAL PRICE EXCEED THAT OF CARGO PACKERS, INC., THERE IS NO REASONABLE ASSURANCE THAT A CLAIM OF ERROR WOULD NOT HAVE BEEN MADE WITH THE REQUEST THAT THE PARTICULAR UNIT PRICES BE CORRECTED TO SHOW THE AMOUNTS OF $30 AND $40 INSTEAD OF THE APPARENTLY INCORRECT PRICES OF $0.30 AND $0.40. THE CONTRACTING OFFICER HAS APTLY DESCRIBED THE CHOICE WHICH WOULD BE ALLOWED TO A BIDDER UNDER SUCH CIRCUMSTANCES AS AFFORDING THE BIDDER "AN OPPORTUNITY FOR A SECOND GUESS AFTER BIDS WERE OPENED.'

ANY SUCH CHOICE WOULD CLEARLY OPERATE AS HAVING AN ADVERSE EFFECT UPON THE RIGHTS OF THE OTHER BIDDERS TO COMPETE ON EQUAL TERMS FOR THE BUSINESS OF THE GOVERNMENT AND WE CANNOT APPROVE THE VIOLATION OF ANY SUCH RIGHTS IN ANY CASE SOLELY BY REASON OF A POSSIBLE MONETARY ADVANTAGE WHICH THE GOVERNMENT MIGHT OBTAIN THROUGH THE PROCESS OF ACCEPTING A BID KNOWN TO CONTAIN MISTAKES WHICH, IF CORRECTED IN ACCORDANCE WITH THE BIDDER'S TRUE INTENTION, WOULD NOT BE THE LOWEST APPARENTLY CORRECT BID RECEIVED IN RESPONSE TO THE INVITATION FOR BIDS.

YOU CONTEND THAT SUCH DECISION IS NOT APPLICABLE IN THE INSTANT MATTER SINCE HERE THERE IS AN ABSENCE OF TWO COMPELLING SITUATIONS WHICH WERE PRESENT IN THE CITED DECISION, THAT IS, ERROR ESTABLISHED AS A FACT AND PRIOR INCONSISTENT CONDUCT. THE LATTER SITUATION, HOWEVER, HAD NO REAL BEARING IN THE DISPOSITION OF THAT CASE. HERE, THERE CAN BE NO DOUBT THAT EITHER THE UNIT OR EXTENDED BID PRICES OF SAMFORD FOR ITEMS 119 AND 120 WERE IN ERROR, AND THAT NOT UNTIL AFTER VERIFICATION WAS THE ERROR EXPLAINED AND CONFIRMED. WHILE IT IS ARGUED THAT THE ERROR WAS CONFINED TO THE EXTENDED PRICES AND THAT BY THE TERMS OF THE INVITATION ITSELF THE UNIT PRICES SHOULD GOVERN, THE CONTRACTING OFFICER WOULD HAVE BEEN SERIOUSLY REMISS IN HIS DUTY IF HE CHOSE TO IGNORE OBVIOUS GROSS ERRORS IN PRICE EXTENSIONS OF EXTREMELY LOW UNIT PRICES.

WE CAN FIND NO REAL DISTINCTION BETWEEN THE CASE DISCUSSED IN 35 COMP. GEN. 33 AND THE ONE HERE INVOLVED. THE QUESTION INHERENT HERE, AS THERE, IS WHETHER THE COMPETITIVE BIDDING SYSTEM WOULD BE ADVERSELY AFFECTED BY CONSIDERING SUCH EXTREMELY LOW UNIT PRICES IN THE ABSENCE OF CONVINCING EVIDENCE THAT THE BID AS SUBMITTED WAS AS ORIGINALLY INTENDED. ADDITION TO THE FACT THAT THE EXTENDED PRICES RATHER THAN THE UNIT PRICES APPEAR TO BE IN LINE WITH THE COST OF THE ITEMS IN QUESTION, THE EVIDENCE OF RECORD DOES NOT IN OUR OPINION SATISFACTORILY ESTABLISH THAT THE BIDDER INTENDED TO QUOTE SUCH RIDICULOUSLY LOW UNIT PRICES. IN THE CIRCUMSTANCES, WE MUST CONCLUDE THAT THE BIDDER HAS PLACED ITSELF, WHETHER INTENTIONALLY OR NOT, IN THE POSITION OF HAVING AN OPPORTUNITY FOR A SECOND GUESS AFTER BIDS WERE OPENED.

YOU FURTHER RELY UPON OUR DECISION REPORTED AT 38 COMP. GEN. 572, WHERE WE DID NOT OBJECT TO AN ADMINISTRATIVE DETERMINATION THAT A PARTICULAR BIDDER MAY BE REGARDED AS AN "ELIGIBLE BIDDER" EVEN THOUGH HE SUBMITTED A NOMINAL (LESS THAN COST) PRICE FOR AN ADDITIVE IN HIS BID FOR A CAPEHART HOUSING PROJECT. THERE WE HELD THAT WHILE SUCH BIDDING RESULTED IN AN "UNBALANCED BID," IT WAS NOT IMPROPER UNDER THE CIRCUMSTANCES. THAT DECISION WENT ON TO STATE THAT:

IT SHOULD BE NOTED THAT THE BIDDING SITUATION UNDER THE SUBJECT INVITATION WAS ESSENTIALLY DIFFERENT FROM BIDDING UNDER ORDINARY CIRCUMSTANCES. GENERALLY, WHEN INVITING PRICES FOR CONSTRUCTION WORK, BIDDERS ARE APPRISED ONLY OF THE JOB SPECIFICATIONS. BUT HERE, IN ADDITION TO THAT INFORMATION, BIDDERS WERE PUT ON NOTICE OF A SPECIFIC $13,000,000 LIMITATION CONTROLLING THE AWARD AND WERE SUPPLIED WITH AN ITEMIZED COST ESTIMATE OF THE PROJECT PREPARED BY FHA. CONSIDERING THE MATTER AGAINST THIS BACKGROUND, AND THE FURTHER FACT THAT ATLANTIC HAD RECEIVED REALISTIC BIDS FROM PROSPECTIVE SUBCONTRACTORS, IT SEEMS CLEAR THAT ATLANTIC WAS AWARE OF WHAT THE ACTUAL COST OF THE ADDITIVE ITEMS MIGHT BE, BUT THAT OF ADDITIVES 1 AND 2. THE INVITATION DID NOT REQUIRE THE BIDDER TO STATE IS ACTUAL COST FOR THE ADDITIVE ITEMS, BUT ONLY ITS BID PRICE. FROM A REVIEW OF THE CIRCUMSTANCES AND AFTER CONDUCTING AN INDEPENDENT INVESTIGATION OF THIS MATTER, THERE IS NO REASON APPARENT TO US NOR HAS ANY PLAUSIBLE REASON BEEN ESTABLISHED TO SHOW THAT THE PURPOSE OF BIDDING THE $1,000 PRICES WAS TO GAIN ANY ADVANTAGE OVER OTHER BIDDERS. RATHER IT WOULD APPEAR THAT THE OBJECTIVE GAINED BY ATLANTIC BY THIS METHOD OF BIDDING WAS A LEGITIMATE ONE, THE AWARD OF THE CONTRACT.

WE THINK THIS CASE CLEARLY IS DISTINGUISHABLE FROM 35 COMP. GEN. 33. THAT CASE ON THE BID THERE WERE DISCREPANCIES BETWEEN UNIT PRICES AND EXTENDED AMOUNTS AND IT WAS READILY APPARENT THAT THE BIDDER COULD HAVE CREATED THOSE DISCREPANCIES INTENTIONALLY IN ORDER TO PLACE HIMSELF IN THE POSITION WHERE HE COULD TAKE ADVANTAGE OF THE UNIT PRICES AND THEREBY MAKE HIMSELF THE LOW BIDDER SHOULD HE FIND AFTER OPENING THAT HE WAS NOT LOW ON THE BASIS OF HIS EXTENDED TOTAL PRICES. HOWEVER IN THIS INSTANCE, THERE ARE NO DISCREPANCIES ON THE FACE OF ATLANTIC'S BID AND, ALL FACTORS CONSIDERED, ITS BID PRICES CANNOT BESAID TO BE OBVIOUSLY ERRONEOUS OR OTHER THAN AS INTENDED.

IT IS TO BE PARTICULARLY NOTED THAT "UNBALANCED BIDS" ARE COUNTENANCED BY THE COURTS ONLY WHERE THERE EXISTS NO POSSIBILITY OF IRREGULARITY OF SUCH SUBSTANTIAL NATURE AS WILL OPERATE TO AFFECT FAIR AND COMPETITIVE BIDDING. SEE FRANK STAMATO AND COMPANY V. CITY OF NEW BRUNSWICK, 90 A.2D 34, 36, AND THE CASES THEREIN CITED. IT IS OBVIOUS HERE IN VIEW OF THE ERROR ON THE FACE OF THE BID THAT SUCH A BID COULD NOT, UNDER THE RULE STATED ABOVE, BE CONSIDERED AS AN ACCEPTABLE "UNBALANCED BID.'

THE OTHER DECISIONS OF OUR OFFICE CITED IN YOUR LETTER OF AUGUST 14, 1959, IN SUPPORT OF YOUR POSITION HAVE BEEN CONSIDERED BUT WE DO NOT FEEL THAT THEY ARE APPLICABLE TO THE SITUATION HERE INVOLVED.

ACCORDINGLY, YOU ARE ADVISED THAT NO LEGAL BASIS EXISTS FOR DISTURBING THE AWARD MADE TO THE FIVE BORO CONSTRUCTION CORPORATION.