B-147218, NOVEMBER 6, 1961, 41 COMP. GEN. 289

B-147218: Nov 6, 1961

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SUBMITS EVIDENCE SHOWING THAT SUBSTANTIAL REVISIONS OF PORTIONS OF HIS ORIGINAL COMPUTATIONS WILL BE REQUIRED TO ARRIVE AT A BID PRICE WHICH HE HAD NO INTENTION OF QUOTING AT THE TIME OF SUBMISSION HAS NOT SUBMITTED EVIDENCE ESTABLISHING AN ACTUAL INTENT TO BID AN AMOUNT OTHER THAN AS SET OUT IN THE BID TO COME WITHIN THE EXCEPTION PERMITTING CORRECTION OF BIDS. 1961: REFERENCE IS MADE TO YOUR LETTER DATED SEPTEMBER 14. SEVEN BIDS WERE RECEIVED AND OPENED ON AUGUST 15. THE THREE LOW BIDS WERE SUBMITTED BY WESTERN OIL TOOL AND MANUFACTURING COMPANY IN THE AMOUNT OF $54. THE ENGINEER'S ESTIMATE WAS $110. ON AUGUST 21 WESTERN OIL ADVISED BY TELEPHONE THAT IT HAD ERRED IN ITS PRICE QUOTATION AND THIS ADVICE WAS CONFIRMED BY ITS LETTER OF AUGUST 24.

B-147218, NOVEMBER 6, 1961, 41 COMP. GEN. 289

BIDS - MISTAKES - CORRECTION - EVIDENCE OF ERROR--- BIDS - EVALUATION - TAX INCLUSION OR EXCLUSION A BIDDER WHO, IN SUBSTANTIATING AN ALLEGATION OF ERROR IN HIS BID PRICE, SUBMITS EVIDENCE SHOWING THAT SUBSTANTIAL REVISIONS OF PORTIONS OF HIS ORIGINAL COMPUTATIONS WILL BE REQUIRED TO ARRIVE AT A BID PRICE WHICH HE HAD NO INTENTION OF QUOTING AT THE TIME OF SUBMISSION HAS NOT SUBMITTED EVIDENCE ESTABLISHING AN ACTUAL INTENT TO BID AN AMOUNT OTHER THAN AS SET OUT IN THE BID TO COME WITHIN THE EXCEPTION PERMITTING CORRECTION OF BIDS; HOWEVER, IN VIEW OF THE DIFFERENCE BETWEEN THE BID PRICE, THE NEXT LOW BID, AND THE GOVERNMENT'S ESTIMATE, EVIDENCE DOES ESTABLISH AN ERROR REQUIRING THE BID TO BE DISREGARDED. IN RESPONSE TO AN INVITATION REQUIRING THE CONTRACT PRICE TO INCLUDE ALL APPLICABLE FEDERAL, STATE AND LOCAL TAXES AND MAKING NO PROVISION FOR EVALUATION OF TAX EXCLUDED BIDS, A BIDDER, WHO SUBMITS A BID ON A TAX- EXCLUDED BASIS WITHOUT SPECIFICALLY IDENTIFYING CLASSES AND AMOUNTS OF TAXES EXCLUDED HAS NOT SUBMITTED A RESPONSIVE BID WHICH CAN BE EVALUATED ON AN EQUAL BASIS WITH OTHER BIDS COMPUTED TO INCLUDE TAXES, EVEN THOUGH THE DIFFERENCE BETWEEN THE LOW BID PRICE AND THE NEXT HIGHEST BID PRICE WOULD BE MORE THAN SUFFICIENT TO COVER ANY TAX EXCLUDED FROM THE LOW BID PRICE.

TO GRANT BLOODGOOD, DEPARTMENT OF THE INTERIOR, NOVEMBER 6, 1961:

REFERENCE IS MADE TO YOUR LETTER DATED SEPTEMBER 14, 1961, FORWARDING THE BIDS SUBMITTED BY WESTERN OIL TOOL AND MANUFACTURING COMPANY, INC., AND BY WORDEN-ALLEN COMPANY UNDER INVITATION FOR BIDS NO. DS-5632. IN YOUR CAPACITY AS CONTRACTING OFFICER, YOU REQUEST OUR ADVICE AS TO WHETHER EITHER BID MAY BE CONSIDERED FOR AWARD.

THE RECORD INDICATES THAT INVITATION FOR BIDS NO. DS-5632 REQUESTED BIDS FOR FURNISHING TWO FIXED-WHEEL GATES FOR THE SPILLWAY AT FLAMING GORGE DAM. SEVEN BIDS WERE RECEIVED AND OPENED ON AUGUST 15, 1961. THE THREE LOW BIDS WERE SUBMITTED BY WESTERN OIL TOOL AND MANUFACTURING COMPANY IN THE AMOUNT OF $54,200, WORDEN-ALLEN COMPANY IN THE AMOUNT OF $82,700, AND JOHNSON MACHINE WORKS IN THE AMOUNT OF $93,600. THE ENGINEER'S ESTIMATE WAS $110,000.

ON AUGUST 21 WESTERN OIL ADVISED BY TELEPHONE THAT IT HAD ERRED IN ITS PRICE QUOTATION AND THIS ADVICE WAS CONFIRMED BY ITS LETTER OF AUGUST 24. UNDER DATE OF AUGUST 30 A NOTARIZED STATEMENT, SIGNED BY THREE OFFICIALS OF WESTERN OIL WAS SUBMITTED, ADVISING THAT A RECHECK OF ITS BID COMPUTATION SHOWED THE FOLLOWING ERRORS:

1.MISINTERPRETED THE DETAILS. IT WAS THOUGHT THAT THE DETAIL QUANTITIES WERE FOR ONE UNIT INSTEAD OF TWO. THIS WOULD REDUCE BY HALF THE QUANTITIES OF PART NUMBERS SEVEN THROUGH SIXTY EIGHT. THIS WAS APPARENTLY CAUSED BY OVERLOOKING DRAWING 591-D-891.

2. MISCALCULATED THE WEIGHT OF THE ECCENTRIC PIN PART NUMBER EIGHT, DRAWING 591-D-896, WORKSHEET NUMBER SIX. THEY WERE CALCULATED AT 417 POUNDS FOR THE TWENTY PINS. THEN DOUBLED FOR A TOTAL WEIGHT OF 834 POUNDS. THEY SHOULD HAVE BEEN CALCULATED AT 4,915 POUNDS.

3. MISCALCULATED THE WEIGHT OF THE PLATE ON THE TOP UNIT, DRAWING 591-D- 892, WORKSHEET NUMBER TWO. CALCULATED AT 6,902 POUNDS SHOULD HAVE BEEN 16,702 POUNDS FOR TWO. AN ERROR OR 9,800 POUNDS.

4. MISCALCULATED THE WEIGHT OF THE PLATE ON THE UPPER INTERMEDIATE UNIT, DRAWING 591-D-893, WORKSHEET NUMBER THREE. CALCULATED AT 10,892 POUNDS, SHOULD HAVE BEEN 14,764 POUNDS. AN ERROR OF 3,872 POUNDS.

5. AN ERROR IN QUANTITY OF PLATE ON THE LOWER INTERMEDIATE UNIT, DRAWING 591-D-894, WORKSHEET NUMBER FOUR. INCREASES THE WEIGHT BY 2,606 POUNDS.

6. AN ERROR IN QUANTITY OF PLATE ON THE BOTTOM UNIT, DRAWING 591-D 855, WORKSHEET NUMBER FIVE, INCREASES THE WEIGHT BY 270 POUNDS.

7. OMITTED THE BOLTS NOT DETAILED AND CALLED FOR ON DRAWING 591-D 891. AN ERROR OF APPROXIMATELY 300 POUNDS.

8. IT WAS OVERLOOKED ON THE FIRST BID THAT THE WHEELS, PART NUMBER SEVEN, DRAWING 591-D-896, WORKSHEET NUMBER SIX, ARE OF HIGH CARBON STEEL AND REQUIRE HEAT TREATING. THERE HAS BEEN AN ADJUSTMENT MADE IN THIS BID TO TAKE CARE OF THIS COST.

9. THE TOTAL WEIGHT ON THE RECALCULATED BID IS NOW 201,850.25. THE COST, USING THE SAME BASIC FIGURES AS BEFORE EXCEPT ADJUSTED WHERE QUANTITY OF MATERIAL HAS CHANGED, $73,828.51.

THIS LETTER WAS ACCOMPANIED BY SIX YELLOW SHEETS DESIGNATED " ORIGINAL BID COMPUTATION" WHICH ITEMIZED WEIGHTS WITHOUT PRICES, AND BY A " SUMMARY" SHEET SHOWING THE BID PRICE OF $54,200 COMPUTED AS FOLLOWS:

CHART

98,900 LB. STEEL ------------------------- 20,000.00

1,803 LB. S. STEEL ------------------------- 3,600.00

4,000 RIB BOLTS -------------------------2,000.00

25,600.00

FRT. 100,000 LBS. ------------------------- 1,500.00

FOR 1 27,100.00

2 54,200.00

ADDITIONALLY, THE LETTER OF AUGUST 30 WAS ACCOMPANIED BY NINE SHEETS DESIGNATED " CORRECTED BID COMPUTATION," WHICH ITEMIZED WEIGHTS, AND BY A " SUMMARY" SHEET SHOWING A CORRECTED BID PRICE OF $73,828.51 COMPUTED AS FOLLOWS:

CHART

MATERIAL COST 32,130.17

FABRICATION COST STEEL 136,782 AT .12 PER LB. 16,413.84

MACHINE 31,075 AT .50 PER LB. 15,537.50

MACHINE

STAINLESS

AND OTHER 6,747 AT 1.00 PER LB. 6,747.00

70,828.51

FRT. 3,000.00

TOTAL 73,828.51

BASED UPON THIS EVIDENCE WESTERN OIL REQUESTS THAT ITS BID PRICE BE CORRECTED TO $73,828.51.

YOU ADVISE THAT YOU ARE CONVINCED WESTERN OIL ERRED SUBSTANTIALLY IN QUOTING ITS ORIGINAL BID PRICE, BUT THAT YOU ARE UNABLE TO REACH ANY CLEAR CONCLUSION AS TO THE PRICE IT MAY ACTUALLY HAVE INTENDED TO BID.

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 THE SUBMISSION OF EVIDENCE ESTABLISHING THAT A BIDDER ACTUALLY INTENDED TO BID AN AMOUNT OTHER THAN SET OUT IN THE BID FORM DOES NOT EXTEND TO PERMITTING A BIDDER TO RECALCULATE AND CHANGE ITS BID TO INCLUDE FACTORS WHICH HE DID NOT HAVE IN MIND WHEN THE BID WAS PREPARED AND SUBMITTED. 17 COMP. GEN. 575, 577. BOTH THE EXPLANATION SUBMITTED BY WESTERN OIL AND THE DOCUMENTS SUBMITTED WITH THE REQUEST FOR CORRECTION INDICATE THAT THE PRICE BID WAS THE PRICE IT INTENDED TO BID AND THAT THE REQUESTED CORRECTION WILL REQUIRE SUBSTANTIAL REVISIONS OF PORTIONS OF ITS ORIGINAL COMPUTATIONS TO ARRIVE AT A BID PRICE WHICH IT HAD NO INTENTION OF QUOTING AT THE TIME OF BID PREPARATION AND SUBMISSION. WHILE WE MUST THEREFORE CONCLUDE THAT THE BID PRICE OF WESTERN OIL MAY NOT BE CORRECTED TO $73,828.51 AND ACCEPTED IN THAT AMOUNT, IT WOULD APPEAR THAT THE DIFFERENCE BETWEEN ITS BID PRICE OF $54,200, THE NEXT LOW BID PRICE OF $82,700, AND THE ENGINEER'S ESTIMATE OF $111,000 IS EVIDENCE OF THE FACT THAT THE BIDDER ERRED SUBSTANTIALLY IN ITS BID COMPUTATION. IN VIEW THEREOF, AND IN VIEW OF THE BIDDER'S ALLEGATION OF ERROR, ACCEPTANCE OF THE BID AS SUBMITTED WOULD NOT RESULT IN A BINDING CONTRACT. THE BID MAY THEREFORE BE DISREGARDED IN MAKING AN AWARD UNDER INVITATION FOR BIDS NO. DS-5632.

CONCERNING THE SECOND LOW BID, WHICH WAS SUBMITTED BY THE WORDEN ALLEN COMPANY IN THE AMOUNT OF $82,700 YOU ADVISE THAT PARAGRAPH A-10, FEDERAL, STATE AND LOCAL TAXES, OF THE SPECIAL CONDITIONS ATTACHED TO THE INVITATION STATED IN SUBPARAGRAPH B AS FOLLOWS:

EXCEPT AS MAY BE OTHERWISE PROVIDED IN THIS CONTRACT, THE CONTRACT PRICE INCLUDES ALL FEDERAL, STATE, AND LOCAL TAXES AND DUTIES IN EFFECT AND APPLICABLE TO THIS CONTRACT ON THE TAX INCLUSIVE DATE, EXCEPT TAXES FROM WHICH THE GOVERNMENT, THE CONTRACTOR, OR THE TRANSACTIONS OR PROPERTY COVERED BY THIS CONTRACT ARE THEN EXEMPT.

YOU ALSO ADVISE THAT THE INVITATION CONTAINED NO EXCEPTION TO THAT PROVISION, BUT THAT THE BID OF THE WORDEN-ALLEN COMPANY CONTAINED THE FOLLOWING TYPEWRITTEN STATEMENT BELOW ITS PRICE QUOTATION ON PAGE A OF ITS BIDDING SCHEDULE:

THIS QUOTATION DOES NOT INCLUDE ANY SALES OR EXCISE TAX LEVIED OR CHARGED, EITHER BY THE FEDERAL, STATE OR MUNICIPAL OR ANY OTHER GOVERNMENT AGENCY.

YOU ADVISE THAT THE ARTICLES TO BE FURNISHED BY WORDEN-ALLEN WOULD BE MANUFACTURED AT MILWAUKEE, WISCONSIN, AND WOULD BE SHIPPED F.O.B. CARS AT GREEN RIVER, AT THE PRICE BID. IN THE ABSENCE OF FURTHER DETAILED INFORMATION CONCERNING THE BIDDER'S OPERATIONS, YOU ADVISE THAT YOU ARE NOT AWARE OF ANY SALES OR EXCISE TAXES WHICH WOULD BE APPLICABLE TO THE TRANSACTION. FURTHER, YOU POINT OUT THAT IN THE EVENT ANY SUCH TAXES SHOULD BE APPLICABLE, THEIR AMOUNT WOULD UNDOUBTEDLY BE INSIGNIFICANT AS COMPARED TO THE DIFFERENCE BETWEEN WORDEN-ALLEN'S BID OF $82,700 AND THE NEXT HIGHER BID OF $93,600 QUOTED BY JOHNSON MACHINE WORKS. YOU THEREFORE EXPRESS THE OPINION THAT THE EXCLUSION OF TAXES FROM WORDEN-ALLEN'S BID DOES NOT MAKE THE BID NONRESPONSIVE OR REQUIRE IT TO BE DISREGARDED IN MAKING AN AWARD.

PARAGRAPH A-10 B OF THE SPECIAL CONDITIONS, AS QUOTED ABOVE, IS A PART OF THE " FEDERAL, STATE AND LOCAL TAXES" CLAUSE WHICH IS REQUIRED BY SUBPART 1-11.401-1 OF THE FEDERAL PROCUREMENT REGULATIONS TO BE INSERTED IN ALL FORMALLY ADVERTISED CONTRACTS. UNLESS OTHERWISE SPECIFIED IN THE DOCUMENTS CONSTITUTING AN INVITATION FOR BIDS, THE INCLUSION OF THIS CLAUSE IN A CONTRACT FORM, WHICH IS IN TURN INCLUDED IN THE INVITATION, CONSTITUTES NOTICE TO ALL BIDDERS THAT BIDS ARE SOLICITED, AND WILL BE EVALUATED, ON A TAX INCLUDED BASIS.

WHETHER FEDERAL, STATE AND LOCAL TAXES ARE APPLICABLE TO A BIDDER'S OPERATIONS AND PRODUCTS PRESENTS A QUESTION ON WHICH THE BIDDER SHOULD BE THE PRIMARY SOURCE OF INFORMATION, AND IT IS THEREFORE OUR OPINION THAT THE SUBMISSION OF A BID PRICE ON A TAX-EXCLUDED BASIS MUST, IN THE ABSENCE OF DEFINITE INFORMATION TO THE CONTRARY, BE CONSIDERED AS EVIDENCE OF THE BIDDER'S BELIEF THAT SUCH TAXES MAY BE ASSESSED IN SOME AMOUNT AGAINST HIS PERFORMANCE OF THE CONTRACT, AND OF HIS UNWILLINGNESS TO ASSUME PAYMENT OF SUCH TAXES AT HIS BID PRICE.

UNDER THE PROVISIONS OF SECTION 303 OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, 41 U.S.C. 253, BIDS ARE REQUIRED TO CONFORM WITH THE TERMS OF THE ADVERTISED INFORMATION TO BE ELIGIBLE FOR AWARD. PURSUANT THERETO SUBPART 1-2.404-2 (B) OF THE FEDERAL PROCUREMENT REGULATIONS PROVIDES FOR THE REJECTION OF A BID IN WHICH THE BIDDER IMPOSES CONDITIONS MODIFYING REQUIREMENTS OF THE INVITATION FOR BIDS OR LIMITING HIS LIABILITY TO THE GOVERNMENT SO AS TO GIVE HIM AN ADVANTAGE OVER OTHER BIDDERS, WHILE SUBPART 1-2.404-2 (B) (5) REQUIRES THE REJECTION OF ANY BID CONTAINING A CONDITION LIMITING THE RIGHTS OF THE GOVERNMENT UNDER ANY CONTRACT CLAUSE UNLESS SUCH CONDITIONS DO NOT GO TO THE PRICE, QUALITY, OR DELIVERY OF THE ITEMS OFFERED. IN EFFECT, THESE REGULATIONS RESTATE THE PRINCIPLES, SET OUT IN VARIOUS DECISIONS OF THIS OFFICE, THAT THE CONTRACT OFFERED TO ONE BIDDER MUST BE THE SAME CONTRACT OFFERED ALL BIDDERS, THAT ALL BIDDERS ARE ENTITLED TO COMPETE ON THE SAME BASIS, THAT ALL BIDS MUST BE EVALUATED ON AN EQUAL BASIS, AND THAT ANY BID WHICH IS SO CONDITIONED AS TO GIVE THE BIDDER A COMPETITIVE ADVANTAGE AND PRECLUDE ITS EVALUATION ON AN EQUAL BASIS WITH OTHER BIDS SUBMITTED IN ACCORDANCE WITH THE TERMS OF THE INVITATION MUST BE REJECTED AS NONRESPONSIVE.

WE ARE ADVISED THAT THE HISTORY OF THE TAX CLAUSE HERE IN QUESTION, AS QUOTED ABOVE, SHOWS THAT ITS OPENING PHRASE " EXCEPT AS MAY BE OTHERWISE PROVIDED IN THIS CONTRACT" CONTEMPLATED ONLY SITUATIONS WHERE THE GOVERNMENT MIGHT WISH TO STIPULATE IN THE ADVERTISED INVITATION, FOR THE INFORMATION OF ALL BIDDERS, THAT CERTAIN TAXES WOULD NOT BE APPLICABLE AND SHOULD NOT BE INCLUDED IN THE BID PRICE, AND WE WOULD NOT FEEL JUSTIFIED IN CONSTRUING THE CLAUSE AS SOLICITING BIDS ON A TAX EXCLUDED BASIS. THE QUESTION PRESENTED BY WORDEN-ALLEN'S BID IS THEREFORE WHETHER IT HAS BEEN SUBMITTED IN A FORM WHICH IS CAPABLE OF EVALUATION ON AN EQUAL BASIS WITH OTHER BIDS COMPUTED, IN ACCORDANCE WITH THE INTENT OF THE INVITATION FOR BIDS, TO INCLUDE ALL APPLICABLE TAXES. THE BID ITSELF GIVES NO INDICATION OF THE AMOUNT OF TAXES, IF ANY, WHICH HAVE BEEN EXCLUDED FROM THE BID PRICE, AND WE INTERPRET YOUR LETTER OF SEPTEMBER 14 TO INDICATE THAT YOUR AGENCY IS NOT PRESENTLY SUFFICIENTLY FAMILIAR WITH THE BIDDER'S OPERATIONS TO ARRIVE AT A DEFINITE CONCLUSION THAT NO TAXES OF THE TYPES EXCLUDED FROM ITS BID PRICE ARE APPLICABLE TO THE CONTRACT OR TO DETERMINE THE EXACT AMOUNT OF SUCH TAXES WHICH WOULD BE APPLICABLE. THIS OFFICE IS IN NO BETTER POSITION AND WE WOULD NOT DEEM IT APPROPRIATE TO IMPOSE UPON THE SEVERAL CONTRACTING AGENCIES THE BURDEN OF EXAMINING INTO THE TAX SITUATION OF EACH BIDDER WHO MAY ELECT TO SUBMIT A BID PRICE ON AN UNSOLICITED TAX-EXCLUDED BASIS, AND OF MAKING UNILATERAL DETERMINATIONS OF THE AMOUNT OF APPLICABLE TAXES WHICH MAY OR MAY NOT BE CORRECT AND ACCEPTABLE TO SUCH BIDDERS.

WE MUST THEREFORE CONCLUDE THAT WHERE, AS IN THE INSTANT CASE, THE INVITATION FOR BIDS INCLUDES THE STANDARD FEDERAL, STATE AND LOCAL TAXES CLAUSE, AND NO PROVISION IS OTHERWISE MADE IN THE INVITATION FOR THE EVALUATION OF TAX-EXCLUDED BID PRICES AND THE AWARD OF A CONTRACT ON THAT BASIS, A BID WHICH IS SUBMITTED ON A TAX-EXCLUDED BASIS, WITHOUT SPECIFICALLY IDENTIFYING THE CLASSES AND AMOUNTS OF TAXES WHICH HAVE BEEN EXCLUDED, MUST BE CONSIDERED NONRESPONSIVE TO THE INVITATION. CF. 37 COMP. GEN. 864. NOTWITHSTANDING THE FACT THAT IN THIS CASE THE DIFFERENCE IN BID PRICES MAY BE MORE THAN SUFFICIENT TO COVER ANY TAXES EXCLUDED FROM WORDEN-ALLEN'S BID PRICE, WE MUST THEREFORE CONCLUDE THAT THE BID IS NONRESPONSIVE TO THE INVITATION AND THAT AN AWARD AT THE PRICE BID WOULD BE IMPROPER. IN THE EVENT A CONTRACT IS AWARDED TO ANY BIDDER UNDER INVITATION FOR BIDS NO. DS 5632, A COPY OF THIS LETTER SHOULD BE ATTACHED TO THE FIRST PAYMENT VOUCHER. OF THIS LETTER SHOULD BE ATTACHED TO THE FIRST PAYMENT VOUCHER.