B-152145, OCT. 4, 1963

B-152145, OCT. 4, 1963

TO PIERSON, BALL AND DOWD:

BY TELEFAX DATED JULY 29, 1963, AND LETTERS DATED AUGUST 23 AND 30, 1963, YOU PROTESTED, ON BEHALF OF THE LEACH CORPORATION, AGAINST THE AWARD MADE BY THE DEPARTMENT OF THE NAVY UNDER INVITATION FOR BIDS NO. 600-1072-63- S.

THE INVITATION DATED MAY 7, 1963, WAS ISSUED AS THE SECOND STEP OF A TWO- STEP FORMALLY ADVERTISED PROCUREMENT AND COVERED THE FURNISHING OF 43 RECORDER-REPRODUCERS, TYPE AN/UNQ-8, 430 ROLLS OF MAGNETIC TAPE, ONE PREPRODUCTION UNIT, RELATED DRAWINGS, MANUALS, AND REPAIR PARTS. THE INVITATION FURTHER PROVIDED FOR OPTION QUANTITIES AT DATE OF AWARD OR WITHIN 180 DAYS THEREAFTER. FIVE BIDS WERE RECEIVED AND OPENED ON MAY 28, 1963, AS FOLLOWS:

TABLE

TELECTRO INDUSTRIES, INC. $330,670

WEBCOR, INC. 506,274

LEACH CORPORATION 1,289,570

MINNEAPOLIS-HONEYWELL 1,473,240

AMERICAN CONCERTONE 1,533,767

ON JUNE 20, 1963, WEBCOR ADVISED THE BUREAU OF SHIPS THAT IT HAD MADE AN ERROR IN ITS BID AND REQUESTED PERMISSION TO WITHDRAW THE BID. REPRESENTATIVE OF THE BUREAU OF SHIPS ORALLY REQUESTED WEBCOR TO FURNISH EVIDENCE TO SUPPORT ITS ALLEGATION OF BID MISTAKE. IN THE MEANTIME, THE BUREAU DETERMINED ON JUNE 27, 1963, THAT TELECTRO WAS NOT A RESPONSIBLE BIDDER DUE TO LACK OF FINANCIAL CAPACITY. BY LETTER DATED JUNE 28, 1963, WEBCOR ADVISED THAT IT HAD MADE A $220,000 ERROR IN ITS BID AND SUBMITTED DOCUMENTARY AND EXPLANATORY INFORMATION IN SUPPORT OF ITS ALLEGATION OF ERROR. BY DETERMINATION NO. 2622 DATED JULY 5, 1963, THE ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, MADE THE FOLLOWING FINDINGS PURSUANT TO ASPR 2-406.3 (G):

"3. WEBCOR STATED ITS INTENDED BID FOR ITEM 1 IS $16,666.82 EACH AND THAT THE BID OF $11,488.12 INCLUDES AN ERRONEOUS COST OF $5,682.10 FOR DESIGN ENGINEERING LABOR, BASED ON 13,260 HOURS INSTEAD OF THE ESTIMATED 33,260 HOURS. AS EVIDENCE, THE BIDDER SUBMITTED A COPY OF ITS ENGINEERING ESTIMATES AND COST SUMMARY SHEETS. THE ENGINEERING ESTIMATE SHEET SHOWS DESIGN ENGINEERING HOURS OF 33,260, WHEREAS THE SUMMARY SHEET SHOWS COST COMPUTED ON THE BASIS OF ONLY 13,260 HOURS. FURTHER ANALYSIS OF THE BIDDER'S WORKSHEETS INDICATES THAT THE CORRECT BID PRICE FOR ITEM 1, BASED ON 33,260 HOURS OF DESIGN ENGINEERING LABOR, AND UTILIZING THE SAME G AND A AND PROFIT FACTORS, WOULD BE $16,666.82. CORRECTION OF THE BID WAS REQUESTED. IF CORRECTED, THE AGGREGATE BID WOULD BE $728,958.36, ITEMS 1 THROUGH 9.

"4. THE CONTRACTING OFFICER STATED THAT, IN HIS OPINION, THE BIDDER HAS SUBMITTED CLEAR AND CONVINCING EVIDENCE OF THE ERROR AND THE INTENDED BID. ACCORDINGLY, HE RECOMMENDED THAT THE BID BE CORRECTED AND CONSIDERED AS INTENDED. HE FURTHER STATED THAT WEBCOR, INC. HAS CONFIRMED ITS INTENDED PRICE OF $16,666.82 FOR ITEM 1, WHICH IS IN LINE WITH THE ESTIMATED COST OF $15,000.00.

"DETERMINATION

"BASED ON THE FOREGOING, IT IS HEREBY DETERMINED THAT WEBCOR, INC. HAS SUBMITTED CLEAR AND CONVINCING EVIDENCE, BOTH AS TO THE ALLEGED ERROR AND INTENT TO BID $16,666.82 FOR ITEM 1. ACCORDINGLY, THE BID MAY BE CORRECTED AND CONSIDERED AS INTENDED.'

WEBCOR EXPLAINED HOW THE MISTAKE OCCURRED AS FOLLOWS:

"IN OUR ORGANIZATION WE CAN EXPLAIN HOW SUCH AN ERROR CAN HAPPEN. THE ENGINEERING DEPARTMENT, INCLUDING PUBLICATIONS, DRAFTING AND THE DESIGN ENGINEERING GROUPS, ALL SUBMIT TO OUR ESTIMATOR THEIR ESTIMATES IN TERMS OF HOURS. THE ESTIMATOR THEN TRANSPOSES THIS INFORMATION TO THE COST SUMMARY SHEETS (IN THIS CASE NUMBERED 1 THROUGH 4) AND IF HE IS AWARE OF THE CURRENT HOURLY RATE OF EACH OF THE CATEGORIES INVOLVED, HE WILL ENTER THIS AND EXTEND IT AND WILL THEN PASS THESE COST SUMMARY SHEETS TO OUR ACCOUNTING DEPARTMENT WHERE EXTENSIONS ARE EITHER MADE OR VERIFIED, AND THE VARIOUS BURDENS APPLIED, SUCH AS OVERHEAD, G AND A, PROFIT, ETC. THEREFORE, THE ACCOUNTING DEPARTMENT CAN ONLY ASCERTAIN THE ACCURACY OF THE CALCULATIONS MADE ON THE SUMMARY SHEETS SINCE THEY HAVE NO ACCESS TO THE ORIGINAL BACK-UP OR ESTIMATE SHEETS UPON WHICH THE SUMMARY IS BASED. CONSEQUENTLY, ANY ERROR MADE IN THE TRANSPOSITION FROM THESE BACK-UP SHEETS ONTO THE SUMMARY SHEETS CANNOT BE DETECTED IN THE ACCOUNTING DEPARTMENT.

"IMMEDIATELY UPON OUR RECEIPT OF THE INFORMATION OF THE BID RESULTS ON THIS EQUIPMENT, WHEREIN WEBCOR'S BID WAS APPROXIMATELY ONE-THIRD UNDER THE THREE (3) HIGH BIDDERS, WE INITIATED AN IMMEDIATE RE EVALUATION OF OUR BID; IT WAS AT THAT TIME THAT WE DISCOVERED THE UNFORTUNATE ERROR. HOWEVER, WHEN WE FOUND THAT A LATER BID OF TELECTRO INDUSTRIES INDICATED A UNIT PRICE OF $9,500.00, WE MADE NO EFFORT TO CALL THE ATTENTION OF THE BUREAU OF SHIPS TO THE ERROR AT THAT TIME. UPON LEARNING THAT TELECTRO INDUSTRIES MAY NOT BE SELECTED FOR AWARD, WEBCOR NOTIFIED THE BUREAU OF SHIPS ON JUNE 20, 1963, OF THE ERROR.'

ACCORDINGLY, CONTRACT NO. NOBS-90010/FBM) WAS AWARDED ON JULY 25, 1963, TO WEBCOR AS THE LOWEST RESPONSIVE, RESPONSIBLE BIDDER.

IT IS YOUR VIEW THAT CORRECTION OF THE WEBCOR BID CONSTITUTED AN UNAUTHORIZED BID MODIFICATION AND THAT THE FAILURE OF WEBCOR TO PROMPTLY FURNISH EVIDENCE OF ITS ALLEGED MISTAKE RAISES A QUESTION AS TO THE VALIDITY OF THE EVIDENCE.

ASPR 2-406.3 PROVIDES IN PERTINENT PART:

"/A) THE DEPARTMENTS ARE AUTHORIZED TO MAKE THE FOLLOWING ADMINISTRATIVE DETERMINATIONS IN CONNECTION WITH MISTAKES IN BIDS, OTHER THAN APPARENT CLERICAL MISTAKES, ALLEGED AFTER OPENING OF BID SAND PRIOR TO AWARD.

"/2) HOWEVER, IF THE EVIDENCE IS CLEAR AND CONVINCING BOTH AS TO THE EXISTENCE OF THE MISTAKE AND AS TO THE BID ACTUALLY INTENDED, AND IF THE BID, BOTH AS UNCORRECTED AND AS CORRECTED, IS THE LOWEST RECEIVED, A DETERMINATION MAY BE MADE TO CORRECT THE BID AND NOT PERMIT ITS WITHDRAWAL.

"/3) WHERE THE BIDDER REQUESTS PERMISSION TO CORRECT A MISTAKE IN HIS BID AND CLEAR AND CONVINCING EVIDENCE ESTABLISHES BOTH THE EXISTENCE OF A MISTAKE AND THE BID ACTUALLY INTENDED, A DETERMINATION PERMITTING THE BIDDER TO CORRECT THE MISTAKE MAY BE MADE; PROVIDED THAT, IN THE EVENT SUCH CORRECTION WOULD RESULT IN DISPLACING ONE OR MORE LOWER BIDS, THE DETERMINATION SHALL NOT BE MADE UNLESS THE EXISTENCE OF THE MISTAKE AND THE BID ACTUALLY INTENDED ARE ASCERTAINABLE SUBSTANTIALLY FROM THE INVITATION AND THE BID ITSELF. IF THE EVIDENCE IS CLEAR AND CONVINCING ONLY AS TO THE MISTAKE, BUT NOT AS TO THE INTENDED BID, A DETERMINATION PERMITTING THE BIDDER TO WITHDRAW HIS BID MAY BE MADE.'

THE AUTHORITY CONTAINED THEREIN TO MAKE CORRECTIONS SUCH AS HERE INVOLVED WAS GRANTED AND IS MATERIALLY CONSISTENT WITH OUR OFFICE DECISION OF JUNE 29, 1954, B-120281. THE QUESTION WHETHER A BIDDER MAY CHANGE A BID AFTER OPENING BECAUSE OF MISTAKE THEREIN ALWAYS PRESENTS A MATTER OF SERIOUS CONCERN. IN ORDER TO AUTHORIZE CORRECTION OF A BID, THE BIDDER MUST FURNISH EVIDENCE WHICH CONCLUSIVELY ESTABLISHES NOT ONLY THE EXISTENCE OF THE MISTAKE, BUT ITS NATURE, HOW IT OCCURRED, AND WHAT THE BIDDER ACTUALLY INTENDED TO BID. SEE ASPR 2 406.3 (D). THE FORM OF SUCH EVIDENCE NECESSARILY WILL VARY WITH THE CIRCUMSTANCES OF EACH CASE, BUT THE EVIDENCE NECESSARILY MUST BE THE BEST AVAILABLE. SINCE THE AUTHORITY TO CORRECT MISTAKES ALLEGED AFTER OPENING BUT PRIOR TO AWARD IS VESTED IN THE PROCUREMENT AGENCY BY REGULATION, THE WEIGHT TO BE GIVEN EVIDENCE IN SUPPORT OF AN ALLEGED MISTAKE IS A QUESTION OF FACT TO BE CONSIDERED BY THE ADMINISTRATIVELY DESIGNATED EVALUATOR OF THE EVIDENCE. WE PERCEIVE OF NO LEGAL BASIS TO CONCLUDE THAT THE EVIDENCE SUBMITTED BY WEBCOR WAS NOT SUFFICIENTLY CLEAR AND CONVINCING TO WARRANT CORRECTION OF WEBCOR'S BID.

WE AGREE THAT EVIDENCE SUPPORTING AN ALLEGED MISTAKE IN BID SHOULD BE FURNISHED PROMPTLY UPON CLAIM OF ERROR SO AS TO AVOID ANY QUESTION AS TO ITS AUTHENTICITY. HOWEVER, WHETHER EVIDENCE WAS SUBMITTED TIMELY TO SUPPORT AN ALLEGATION OF MISTAKE IN BID IS A QUESTION DEPENDENT ON THE CIRCUMSTANCES INVOLVED. THE TIMELINESS OF EVIDENCE SUBMITTED TO SUPPORT AN ALLEGATION OF MISTAKE BY A LOW APPARENT BIDDER WOULD NOT BE THE SAME IN THE CASE OF A BIDDER WHO IS NOT LOW AT TIME OF OPENING. THERE IS NO REGULATORY REQUIREMENT FOR AN OTHER THAN LOW APPARENT BIDDER TO ALLEGE A MISTAKE IN BID AND FURNISH EVIDENCE TO SUPPORT THE ALLEGATION PRIOR TO THE TIME SUCH BIDDER'S RELATIVE POSITION BECOMES SUCH AS TO MAKE HIM ELIGIBLE FOR AWARD. IN FACT, CORRECTION OF A BID IS ORDINARILY DENIED WHERE TO DO SO WOULD DISPLACE THE OTHERWISE LOW BIDDER. 40 COMP. GEN. 432, 434.

THE RECORD IS CLEAR THAT WEBCOR PROMPTLY ALLEGED MISTAKE UPON LEARNING THAT TELECTRO MIGHT BE DISQUALIFIED AS A RESPONSIBLE BIDDER, AND THAT SUPPORTING EVIDENCE WAS PROMPTLY FURNISHED BY WEBCOR AFTER IT BECAME THE LOW RESPONSIVE BIDDER. WE, THEREFORE, ARE OF THE VIEW THAT WEBCOR'S EVIDENCE WAS SUBMITTED PROMPTLY WITH ITS ALLEGATION OF MISTAKE. THE RECORD BEFORE US ESTABLISHES THAT THE EVIDENCE OF MISTAKE WAS IN EXISTENCE PRIOR TO BID OPENING SINCE IT CONSISTED OF WEBCOR'S ORIGINAL WORK PAPERS USED IN PREPARING ITS BID.

DECISION B-147265 DATED SEPTEMBER 29, 1961, CITED BY YOU AS BEING DIRECTLY IN POINT, IS DISTINGUISHABLE FROM THE INSTANT MATTER. IN THAT CASE, THE RECORD DISCLOSED THAT THE WORKSHEETS SUBMITTED IN SUPPORT OF THE ALLEGATION OF MISTAKE WERE VAGUE, CONFLICTING AND DIFFICULT TO INTERPRET. THAT IS NOT THE SITUATION HERE SINCE WEBCOR'S EVIDENCE AND EXPLANATIONS CLEARLY AND CONVINCINGLY ESTABLISHED ITS INTENDED BID. IN B-146424 DATED SEPTEMBER 18, 1961, CITED BY YOU, THE EVIDENCE OF MISTAKE WAS BASED ON COST INFORMATION ACQUIRED AFTER BIDS WERE OPENED. HERE, WEBCOR'S EVIDENCE OF MISTAKE WAS ITS WORKSHEETS USED IN PREPARING ITS BID.

ACCORDINGLY, AND SINCE CORRECTION OF WEBCOR'S BID DID NOT CONSTITUTE A RECALCULATION OF ITS ..END :