B-150122, NOVEMBER 23, 1962, 42 COMP. GEN. 257

B-150122: Nov 23, 1962

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IS AN AMBIGUOUS INVITATION UNDER WHICH AN AWARD WOULD BE IMPROPER IN VIEW OF THE FACT THAT BY THE USE OF ESTIMATED QUANTITIES FOR BID EVALUATION PURPOSES THAT DIFFER FROM ACTUAL ANTICIPATED NEED. A BIDDER MAY BE FOUND LOW ON EVALUATION OF HIS BID WHO IS NOT THE LOWEST BIDDER ON THE REAL. WHERE THE SUCCESSFUL BIDDER WHO UNDER ANY POSSIBLE EVALUATION WOULD NOT HAVE BEEN THE LOW BIDDER BUT FOR THE CORRECTION OF AN ERRONEOUS UNIT PRICE NOT APPARENT ON THE FACE OF THE BID. THE SUBJECT INVITATION WAS ISSUED BY EDWARDS AIR FORCE BASE. THE AWARD PROCEDURE WAS STATED IN PARAGRAPH O OF THE ORIGINAL INVITATION AS FOLLOWS: AGGREGATE AWARD: ONLY ONE AWARD WILL BE MADE AS A RESULT OF THIS INVITATION FOR BIDS.

B-150122, NOVEMBER 23, 1962, 42 COMP. GEN. 257

BIDS - EVALUATION - ESTIMATES - MORE THAN ONE. BIDS - MISTAKES - CORRECTION - LOW BID DISPLACEMENT AN INVITATION TO BID PROVIDING FOR AN AWARD TO THE LOWEST AGGREGATE BIDDER ON ITEMS TO BE EVALUATED ON THE BASIS OF ESTIMATED QUANTITIES LISTED IN DIFFERENT AMOUNTS--- ONE ON ACTUAL REQUIREMENTS, THE OTHER AN ARBITRARY ESTIMATE FOR EVALUATION PURPOSES--- WITH NO INDICATION TO THE BIDDER AS TO WHICH ESTIMATE WOULD BE USED TO EVALUATE HIS BID, IS AN AMBIGUOUS INVITATION UNDER WHICH AN AWARD WOULD BE IMPROPER IN VIEW OF THE FACT THAT BY THE USE OF ESTIMATED QUANTITIES FOR BID EVALUATION PURPOSES THAT DIFFER FROM ACTUAL ANTICIPATED NEED, A BIDDER MAY BE FOUND LOW ON EVALUATION OF HIS BID WHO IS NOT THE LOWEST BIDDER ON THE REAL, OR THE BEST ESTIMATE OF REQUIREMENTS. A CONTRACT AWARD FOR PRINTING SERVICES TO A LOW BIDDER UNDER AN AMBIGUOUS INVITATION THAT DID NOT INDICATE WHICH OF TWO DIFFERENT ESTIMATES--- ONE ON THE BASIS OF ACTUAL NEED, THE OTHER ON AN ARBITRARY BASIS FOR EVALUATION PURPOSES--- WOULD BE USED TO EVALUATE BIDS, WHERE THE SUCCESSFUL BIDDER WHO UNDER ANY POSSIBLE EVALUATION WOULD NOT HAVE BEEN THE LOW BIDDER BUT FOR THE CORRECTION OF AN ERRONEOUS UNIT PRICE NOT APPARENT ON THE FACE OF THE BID, SHOULD BE CANCELED, EXCEPT FOR ORDERS ALREADY PLACED, AND THE PROCUREMENT READVERTISED UNDER A PROPER EVALUATION PROCEDURE, THE CONTRACTING OFFICER HAVING NO AUTHORITY TO MAKE AN AWARD ON THE BASIS OF A DOWNWARD CORRECTION OF A BID, EVIDENCING NO ERROR ON ITS FACE, WHICH DISPLACED A LOWER BIDDER.

TO THE SECRETARY OF THE AIR FORCE, NOVEMBER 23, 1962:

THIS REFERS TO A LETTER DATED OCTOBER 12, 1962, WITH ENCLOSURE, FROM YOUR DEPARTMENT REFERENCE: AFSPM-PO-1), CONCERNING A PROTEST BY CIENEGA LITHOGRAPHERS AGAINST THE AWARD MADE TO PASADENA LITHOGRAPHERS, UNDER INVITATION FOR BIDS NO. 104-611-62-265.

THE SUBJECT INVITATION WAS ISSUED BY EDWARDS AIR FORCE BASE, CALIFORNIA, ON MAY 24, 1962, COVERING PRINTING SERVICES, AS MIGHT BE NEEDED, FROM THE DATE OF AWARD THROUGH MAY 31, 1963. THE INVITATION SCHEDULE LISTED 56 REQUIRED ITEMS FOR BIDDING, AND THE AWARD PROCEDURE WAS STATED IN PARAGRAPH O OF THE ORIGINAL INVITATION AS FOLLOWS: AGGREGATE AWARD:

ONLY ONE AWARD WILL BE MADE AS A RESULT OF THIS INVITATION FOR BIDS. EVALUATION OF BIDS WILL BE ON THE BASIS OF ESTIMATED QUANTITIES SHOWN EXTENDED BY THE UNIT PRICES BID TO ARRIVE AT AN AGGREGATE TOTAL. AWARD WILL BE MADE TO THAT RESPONSIVE RESPONSIBLE BIDDER WHO SUBMITS THE LOWEST AGGREGATE BID. IN NO EVENT WILL A BID BE CONSIDERED ACCEPTABLE UNLESS BIDDER SUBMITS A BID ON ALL ITEMS. IT IS REITERATED THAT QUANTITIES SHOWN HEREIN ARE ESTIMATES ONLY.

AMENDMENT NO. 1 TO THE INVITATION REVISED THE UNIT ESTIMATES FOR ITEM NOS. 28 AND 39, AND AMENDMENT NO. 2 ADDED THE FOLLOWING PROVISION: THE AGGREGATE TOTAL AS SHOWN ON THE BIDS SUBMITTED ARE BASED ON ESTIMATED QUANTITIES AND WILL BE USED FOR EVALUATION PURPOSES ONLY. IT IS ESTIMATED THAT THE TOTAL AMOUNT OF WORK CALLED FOR AGAINST THE RESULTING CONTRACT WILL NOT EXCEED $70,000 DURING THE CONTRACT PERIOD. YOUR ATTENTION IS DIRECTED TO PROVISION L. "ESTIMATED REQUIREMENTS," WHICH READS IN PART THAT QUANTITIES SHOWN ARE ESTIMATED ONLY AND ARE NOT PURCHASED HEREBY.

SOME OF THE LISTED ITEMS IN THE INVITATION STATED ESTIMATED QUANTITIES IN THE ITEM DESCRIPTION AS WELL AS IN THE ESTIMATED QUANTITY COLUMN, AND THESE QUANTITIES DIFFERED. THIS OCCURRENCE IS SIGNIFICANTLY ILLUSTRATED BY ITEM NOS. 40, 41 AND 55, WHICH ARE SET FORTH IN THE INVITATION SCHEDULE AS FOLLOWS:

CHART ITEM ESTIMATED UNIT

NO. DESCRIPTION QUANTITY UNIT PRICE AMOUNT

40 COVERS, 2 PAGE/ESTIMATED 100 SETS $----- $-----

QUANTITY 25,542)

41 COVERS, 2 PAGE, ADDITIONAL 100 SETS $----- $-----

100 SETS (ESTIMATED

QUANTITY 25,287)

55 CATALOG CARDS. TWO SHEETS 400 SHEETS $----- $-----

OF CATALOG CARDS PRINTED

ON TWO SIDES IN FOUR

AREAS FROM GOVERNMENT

FURNISHED COPY WILL BE

TIPPED IN TO THE INSIDE

OF BACK COVER. * * *

(ESTIMATED QUANTITY

52,668 SHEETS)

BID OPENING WAS HELD ON JUNE 20, 1962, AND SIX BIDS WERE RECEIVED AND TABULATED. IT IS REPORTED THAT THE BIDS RANGED IN PRICE FROM $50,501.38 TO $2,310,934.04, AND THAT THE 3 HIGHEST BIDS WERE FOUND TO BE OVER $1,300,000; ALSO, THAT THE LOW BID AT $50,501.38 WAS FOUND TO BE NONRESPONSIVE. THE SECOND AND THIRD LOW BIDS, WHICH HAVE BEEN FORWARDED HERE, WERE TABULATED AT THAT TIME AS FOLLOWS:

CIENEGA LITHOGRAPHERS $54,848.84

PASADENA LITHOGRAPHERS $56,539.69

THE CONTRACTING OFFICER NOTED SOME ERRORS IN THE EXTENSION OF PRICES IN THESE TWO BIDS, AND AS A RESULT, HE REQUESTED VERIFICATION OF BIDS FROM ALL RESPONSIVE BIDDERS. ONLY CIENEGA AND PASADENA SOUGHT TO MODIFY THEIR BIDS. BY LETTER OF JULY 12, 1962, PASADENA POINTED OUT ERRORS OF EXTENSION FOR CERTAIN ITEMS. THESE ERRORS AMOUNTED TO ONLY A $14 REDUCTION IN PRICE. IN ADDITION HOWEVER, PASADENA REPORTED AN ERROR IN THE UNIT PRICE OF ITEM NO. 52. THE BIDDER STATED THAT IT INCORRECTLY QUOTED A UNIT PRICE OF $4.75 ON 3,857 UNITS WHEREAS IT INTENDED TO QUOTE A UNIT PRICE OF $2.50. THE RESULT OF THIS WOULD BE TO REDUCE ITS BID BY $8,678.25 (THE ORIGINAL BID ON ITEM NO. 52 OF $18,320.75, LESS THE INTENDED BID OF $9,642.50).

BY LETTER OF JULY 16, 1962, CIENEGA VERIFIED ITS UNIT PRICES AS CORRECT, BUT IT STATED THAT THE EXTENDED PRICES ON ITEM NOS. 40 AND 41 WERE INCORRECT. IT QUOTED A UNIT PRICE OF $16.50 PER 100 SETS ON ITEM NO. 40, WHICH IT EXTENDED AS $421.44, AND A UNIT PRICE OF $4.50 PER 100 SETS ON ITEM NO. 41, WHICH IT EXTENDED AS $113.79. CIENEGA STATED THAT ITS EXTENDED PRICE ON ITEM NO. 40 SHOULD HAVE BEEN $4,214.43, AND THAT ON ITEM NO. 41 IT SHOULD HAVE BEEN $1,137.92. IT IS APPARENT THAT CIENEGA ARRIVED AT THESE TOTALS ON THE BASE OF 25,542 SETS AT $16.50 PER HUNDRED SETS ON ITEM NO. 40, AND 25,287 SETS AT $4.50 PER HUNDRED SETS ON ITEM NO. 41.

THE CONTRACTING OFFICER CONCLUDED THAT THE CORRECTIONS ASSERTED ON BOTH BIDS SHOULD BE ALLOWED. THE EFFECT OF THE CIENEGA CORRECTIONS WAS TO INCREASE THAT BID TO $59,665.96. ON THE OTHER HAND, THE EFFECT OF THE PASADENA CORRECTIONS WAS TO REDUCE THAT BID TO $47,847.44. THE CONTRACTING OFFICER ALLOWED THE REDUCTION IN THE PASADENA BID ON THE BASIS THAT SINCE CIENEGA WAS REEVALUATED AT $59,665.96, PASADENA WAS NOW THE LOW BIDDER, AND IT COULD VOLUNTARILY REDUCE ITS PRICE. WE NOTE THAT THE REDUCTION IN PRICE ON ITEM NO. 52 BY PASADENA WAS ASSERTED ON JULY 12, 1962, PRIOR TO THE TIME THAT CIENEGA ASSERTED ITS CORRECTIONS AND WOULD HAVE RESULTED, IF THEN ACCEPTED, IN DISPLACEMENT OF CIENEGA'S LOWER BID.

ON AUGUST 1, 1962, PASADENA RECEIVED AWARD OF A CONTRACT IN THE TOTAL ESTIMATED AMOUNT OF $47,847.44.

AFTER THE AWARD IT WAS NOTED THAT WITH REGARD TO THOSE ITEMS WHERE MORE THAN ONE ESTIMATED QUANTITY WAS STATED, CIENEGA AND PASADENA DID NOT COMPUTE THEIR AGGREGATE BID PRICES ON THE SAME ESTIMATE. FOR EXAMPLE, IN THE CASE OF ITEM NO. 55 CIENEGA WAS EVALUATED AT A TOTAL PRICE OF $763.86. THIS AMOUNT WAS COMPUTED ON THE BIDDER'S PRICE OF $0.0145 PER UNIT MULTIPLIED BY 52,668, THE ESTIMATED QUANTITY STATED IN THE ITEM DESCRIPTION. HOWEVER, ON A UNIT PRICE OF $0.15, PASADENA WAS EVALUATED FOR THIS ITEM AT A TOTAL PRICE OF $60, WHICH IT COMPUTED BY MULTIPLYING ITS UNIT PRICE BY 400, THE QUANTITY STATED IN THE ESTIMATED QUANTITY COLUMN. ON ITEM NO. 40, PASADENA WAS EVALUATED AT $25 (COMPUTED ON 100 UNITS), WHILE, AS PREVIOUSLY INDICATED, CIENEGA WAS EVALUATED AT $4,214.43 (COMPUTED ON 25,542 UNITS). THE COMPUTATIONS ON ITEM NO. 41 WERE SIMILARLY MADE.

IT IS REPORTED THAT THE CONTRACTING OFFICER INTENDED THAT THE MULTIPLIER SHOWN IN THE ,ESTIMATED QUANTITY" COLUMN SHOULD BE USED FOR THE BID EVALUATION; AND THAT THIS FIGURE IN THE CASE OF THOSE ITEMS WHERE TWO ESTIMATES ARE INDICATED IS AN ARBITRARY FIGURE, CHOSEN FOR PURPOSES OF BID EVALUATION ONLY. THE TRUE ESTIMATES OF PROBABLE REQUIREMENTS IN THESE CASES ARE THE FIGURES STATED IN THE ITEM DESCRIPTIONS.

AS YOUR DEPARTMENT RECOGNIZES THE AWARD PROCEDURE FOLLOWED IN THIS PROCUREMENT WAS IMPROPER. BY USING ESTIMATED QUANTITIES FOR BID EVALUATION DIFFERENT FROM THE ACTUAL ANTICIPATED NEED FOR AN ITEM THE PROBABILITY ARISES THAT A BIDDER MAY BE FOUND LOW ON EVALUATION WHO IS NOT THE LOWEST BIDDER ON THE REAL REQUIREMENTS, OR THE BEST ESTIMATE THEREOF. FOR THIS REASON, YOUR DEPARTMENT STATES THAT IT IS NOT AIR FORCE POLICY TO USE ARBITRARY ESTIMATES FOR EVALUATION, WHEN A BETTER ESTIMATE IS AVAILABLE.

ANOTHER DEFECT IN THE AWARD PROCEDURE WAS THAT THE INVITATION WAS UNCLEAR AS TO WHICH ESTIMATE WAS TO BE USED. ALTHOUGH WE HAVE NOT SEEN THE THREE HIGH BIDS, IT IS PROBABLE THAT THE THREE HIGHER BIDDERS WERE CONFUSED, JUDGING BY THEIR EVALUATED BID PRICES.

CIENEGA AND PASADENA WERE NOT EVALUATED ON THE SAME BASIS. WE NOTE THAT IF THE BIDS OF CIENEGA AND PASADENA ARE EVALUATED ON THE BASIS OF ACTUAL ESTIMATED QUANTITIES, AND EVEN IF THE PASADENA BID IS CONSIDERED WITH THE $8,678.25 REDUCTION AS TO ITEM NO. 52, CIENEGA IS FOUND TO BE THE LOW BIDDER. THE RESULT IS AS FOLLOWS:

CHART

BASED ON ACTUAL ESTIMATES

CIENEGA $59,665.80

PASADENA (INCLUDING THE DOWNWARD CORRECTION AS TO ITEM

NO. 52) $65,296.54

FURTHERMORE, EVEN IF WE EVALUATE THE TWO BIDS ON THE BASIS OF THE ARBITRARY QUANTITIES AS THE CONTRACTING OFFICER INTENDED, WE FIND THAT THE CIENEGA BID SHOULD HAVE BEEN EVALUATED LOWER THAN THE PASADENA BID. THIS IS SHOWN BY ADJUSTING THE CIENEGA BID TO REFLECT ITEM TOTALS BASED ON THE ARBITRARY ESTIMATES, WHICH YOUR DEPARTMENT HAS COMPUTED AT A TOTAL AMOUNT OF $53,471.56. THE PASADENA BID WAS EVALUATED AT $47,847.44 ONLY AFTER THE BID WAS REDUCED BY $8,678.44 ON ITEM NO. 52. WITHOUT THIS REDUCTION PASADENA IS NOT LOWER THAN CIENEGA. SINCE THE ERROR WAS NO APPARENT ON THE FACE OF THE BID, AND A CORRECTION HAD THE EFFECT OF DISPLACING A LOWER BIDDER, THE DOWNWARD CORRECTION SHOULD NOT HAVE BEEN ALLOWED. SEE 37 COMP. GEN. 210.

IN THESE CIRCUMSTANCES THE CONTRACTING OFFICER HAD NO AUTHORITY TO MAKE THE AWARD TO PASADENA LITHOGRAPHERS. THE INVITATION WAS AMBIGUOUS WITH REGARD TO BID EVALUATION, BUT UNDER ANY OF THE POSSIBLE EVALUATION BASES PASADENA WAS NOT THE LOW BIDDER. ACCORDINGLY, THE AWARD SHOULD BE CANCELED EXCEPT FOR ORDERS ALREADY PLACED, AND THE PROCUREMENT SHOULD BE READVERTISED UNDER A PROPER EVALUATION PROCEDURE. SEE 40 COMP. GEN. 160.