B-161299, JUL. 31, 1967

B-161299, JUL. 31, 1967

BIDS - MISTAKES - CORRECTION DECISION TO UMC ELECTRONICS CO. RE PROTEST TO AWARD OF CONTRACT FOR TEST STANDS FOR ROCK ISLAND ARSENAL TO SUN ELECTRIC CO. ON BASIS OF ADMINISTRATIVELY CORRECTED BID. LOW BIDDER WHO BEFORE AWARD PROMPTLY ALLEGED ERROR DUE TO MISTAKE IN SUPPLIER'S QUOTATION AND WHO SUBMITTED EVIDENCE INDICATING MISTAKE, HOW IT OCCURRED AND INTENDED BID PRICE HAD HIS BID PROPERLY CORRECTED SINCE WEIGHT OF EVIDENCE IS PRIMARILY A QUESTION OF FACT TO BE DETERMINED IN THIS CASE BY THE ARMY MATERIAL COMMAND. IN ABSENCE OF CONTRADICTORY EVIDENCE THAT SUN ELECTRIC KNEW OF SUPPLIER'S ERROR, KNOWLEDGE COULD NOT BE IMPUTED NEITHER CAN LOW BIDDER BE CONSIDERED TO HAVE BEEN "BUYING IN" AS PROHIBITED BY ASPR 1-311 IN ABSENCE OF ANY EVIDENCE TO SUPPORT SUCH ALLEGATION. THE EVIDENCE ESTABLISHES MERELY AN OVERSIGHT NOT A WILFULL INTENT TO MAKE AN ERRONEOUSLY LOW BID.

TO MR. A. J. SHAFTEL, PRESIDENT, UNITED MANUFACTURING DIVISION, UMC ELECTRONICS COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED APRIL 17, 1967, AND SUBSEQUENT COMMUNICATIONS PROTESTING AWARD OF CONTRACT TO SUN ELECTRIC CORPORATION ON THE BASIS OF AN ADMINISTRATIVELY CORRECTED BID UNDER IFB NO. DAAF01-67-B-0045 ISSUED FOR THE PROCUREMENT OF TEST STANDS BY ROCK ISLAND ARSENAL, ROCK ISLAND, ILLINOIS, ON AUGUST 29, 1966.

THE TWO BIDS RECEIVED WERE OPENED AS SCHEDULED ON SEPTEMBER 28, 1966. THE BIDS ON AN F.O.B. ORIGIN BASIS WITH FIRST ARTICLE APPROVAL (WHICH IS THE BASIS UPON WHICH AWARD WAS ULTIMATELY MADE AND ALL SUBSEQUENT REFERENCES TO BID PRICE REFER TO THIS BASIS) WERE FOR UMC $5,692, AND FOR SUN ELECTRIC $4,790. ON OCTOBER 25, 1966, A REPRESENTATIVE OF SUN ORALLY ADVISED GOVERNMENT PROCUREMENT PERSONNEL THAT THERE WAS AN ERROR IN SUN'S BID. BY TELETYPE DATED OCTOBER 26, 1966, ROCK ISLAND ARSENAL ADVISED SUN OF THE PROCEDURE TO BE FOLLOWED IN A CLAIM OF ERROR IN BID.

IN RESPONSE, BY LETTER DATED NOVEMBER 4, 1966, SUN ELECTRIC ALLEGED THAT RELIANCE ELECTRIC AND ENGINEERING COMPANY HAD ADVISED THEM THAT AN ERROR WAS MADE IN PREPARATION OF THEIR QUOTATION FOR DRIVE UNITS, COMPONENTS TO BE INCORPORATED INTO THE TEST STANDS REQUESTED BY THE INVITATION FOR BIDS. SUN'S LETTER TO ROCK ISLAND STATES IN PART:

"ON 27 SEPTEMBER 1966 WE RECEIVED A BID OF $1001.70 EACH FROM RELIANCE ELECTRIC AND ENGINEERING COMPANY (COPY ATTACHED) FOR THE DRIVE PORTION OF THE GENERATOR TEST STAND. ON 13 OCTOBER 1966 WE RECEIVED A TELEGRAM FROM RELIANCE, (PLEASE NOTE THIS IS AFTER BID OPENING 28 SEPTEMBER 1966) WITHDRAWING THE PREVIOUSLY QUOTED PRICE OF $1001.70 AND SUBMITTING A NEW PRICE OF $1590.00, AN INCREASE OF $588.30 PER UNIT. REASON FOR INCREASE - DUE TO CLERICAL ERROR. - "

IN SUPPORT OF THIS ALLEGATION, SUN SUBMITTED THE PERTINENT QUOTATIONS BY RELIANCE, AND CERTIFIED COPIES OF SUN'S WORK AND COST SHEETS, SHOWING THAT BASED ON THE ACTUAL COST FOR THE DRIVE PORTION THE BID PRICE WOULD HAVE BEEN $5,431.79. THIS ALLEGATION WAS FURTHER SUPPORTED BY AN AFFIDAVIT OF MR. CLYDE W. SEAL, PRODUCT SECTION MANAGER FOR RELIANCE, AND BY A COPY OF A RELIANCE INTER-OFFICE MEMORANDUM REFLECTING THE ERROR. IN VIEW OF THIS CLEAR AND CONVINCING EVIDENCE AS TO BOTH THE MISTAKE AND THE INTENDED CORRECT BID, AND SINCE THE BID AS CORRECTED WAS STILL LOW, THE CONTRACTING OFFICER, PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION 2-406.3, ALLOWED THE BID TO BE CORRECTED, AND AWARDED THE CONTRACT TO SUN ON THE BASIS OF THE CORRECTED BID LESS A VOLUNTARY REDUCTION DOWN TO $5,327.15. THIS VOLUNTARY REDUCTION HAS NO BEARING ON THE VALIDITY OF THE CONTRACTING OFFICER'S ACTION.

IN PROTESTING THE CORRECTION PERMITTED BY THE CONTRACTING OFFICER, YOU CONCLUDE THAT SUN IS EITHER BUYING IN AS DESCRIBED IN ASPR 1-311 OR ELSE IS ALLEGING A MISTAKE IN ORDER TO REDUCE THE LOSSES WHICH WOULD RESULT FROM LOW BID PRICE. IN SUPPORT OF THESE CONCLUSIONS YOU CONTEND THAT SUN ELECTRIC, FROM ITS MANY PAST TRANSACTIONS INVOLVING THIS ITEM, SHOULD HAVE REALIZED THAT THE QUOTE MADE BY RELIANCE WAS ERRONEOUS. FURTHER, YOU FURNISHED THIS OFFICE WITH PRIOR QUOTATIONS MADE TO YOUR COMPANY BY THE TWO KNOWN SUPPLIERS OF THIS DRIVE UNIT, RELIANCE AND U.S. ELECTRICAL MOTORS, TO ILLUSTRATE THAT THE QUOTE OF $1,001.70, AS SUN ELECTRIC SHOULD HAVE REALIZED, WAS CONSIDERABLY OUT OF LINE.

WHERE A MISTAKE IS SO APPARENT THAT THE CONTRACTING OFFICER MUST HAVE KNOWLEDGE OF IT THE GOVERNMENT CANNOT TAKE ADVANTAGE OF THE CONTRACTOR BY HOLDING IT TO A CONTRACT WHICH IT HAD NO INTENTION OF MAKING. SEE 2 COMP. GEN. 502; 8 ID. 362; 15 ID. 1049; 20 ID. 652. THESE MISTAKES ARE MOST OFTEN DUE TO AN OVERSIGHT ON THE PART OF THE CONTRACTOR AND CORRECTION OF THESE MISTAKES IS NOT ONLY CONSISTENT WITH THE STATUTES REQUIRING ADVERTISING, BUT MAY BE NECESSARY TO SECURE THE BENEFITS OF COMPETITION.

WHEN A MISTAKE HAS BEEN ALLEGED PROMPTLY AND BEFORE AWARD OF CONTRACT, OUR OFFICE HAS PERMITTED CORRECTION IF CLEAR AND CONVINCING EVIDENCE WAS PRESENTED THAT A MISTAKE WAS MADE, ITS NATURE, HOW IT OCCURRED, AND WHAT THE BID WOULD HAVE BEEN EXCEPT FOR THE MISTAKE. SEE 35 COMP. GEN. 210. THE WEIGHT TO BE GIVEN EVIDENCE SUBMITTED IN SUPPORT OF A REQUESTED CORRECTION OF A BID IS PRIMARILY A QUESTION OF FACT TO BE CONSIDERED BY THE EVALUATOR AUTHORIZED BY THE REGULATIONS TO MAKE SUCH A DETERMINATION, IN THIS CASE, THE GENERAL COUNSEL, UNITED STATES ARMY MATERIEL COMMAND. SEE 41 COMP. GEN. 160; B-150904, MAY 24, 1963, AND B-160784, APRIL 13, 1967.

THEREFORE, IN THE ABSENCE OF CONTRADICTORY EVIDENCE THAT SUN ELECTRIC DID KNOW OF RELIANCE'S ERROR PRIOR TO BID, THIS OFFICE CANNOT IMPUTE SUCH KNOWLEDGE AND PERCEIVES NO LEGAL BASIS FOR OBJECTING TO THE ACTION TAKEN BY THE DEPARTMENT OF THE ARMY.

CORRESPONDINGLY, YOUR CONCLUSION THAT SUN ELECTRIC WAS BUYING IN, MUST BE REJECTED AS UNSUPPORTED BY THE EVIDENCE. ASPR 1-311 REQUIRES THE BIDDER TO KNOWINGLY OFFER A PRICE OR COST LESS THAN ANTICIPATED COSTS. THE EVIDENCE, AS POINTED OUT, AT BEST ESTABLISHED AN OVERSIGHT NOT A WILFULL INTENT BY SUN ELECTRIC TO MAKE AN ERRONEOUSLY LOW BID.

YOUR LETTER ALSO PROTESTS THAT AWARD SHOULD NOT HAVE BEEN MADE TO SUN ELECTRIC CORPORATION UNTIL YOUR PROTEST WAS RESOLVED AND YOU CITE AS AUTHORITY, ASPR 2-407.9. THIS OFFICE WAS ADVISED BY THE DEPARTMENT OF THE ARMY THAT YOUR TELEGRAM DATED APRIL 4, 1967, TO ROCK ISLAND ARSENAL WAS UNDERSTOOD TO STATE ONLY A POSSIBLE FUTURE INTENT TO FILE A PROTEST, AND ACCORDINGLY, ASPR 2-407.9 WAS NOT CONSIDERED APPLICABLE AS IT RELATES TO PROTESTS ACTUALLY FILED. WHILE WE DO NOT NECESSARILY CONCUR IN THE DEPARTMENT'S INTERPRETATION OF YOUR TELEGRAM, IN THE ABSENCE OF EVIDENCE OF BAD FAITH IN THIS INTERPRETATION, WE MUST CONCLUDE THAT YOUR TELEGRAM WAS AMBIGUOUS AND THIS OFFICE WILL NOT, THEREFORE, IMPRESS UPON THE DEPARTMENT YOUR CONSTRUCTION OF ITS EFFECT. FURTHER, THE DEPARTMENT OF THE ARMY HAS STATED THAT AT NO TIME DID THEY JUSTIFY THE AWARD ON THE BASIS OF URGENT REQUIREMENTS AND THAT THE DELAY IN AWARD WAS DUE TO (1) DETERMINING WHETHER THE MISTAKE IN BID MAY BE CORRECTED AND (2) THE WITHHOLDING OF ARMY STOCK FUNDS BY THE COMMANDING GENERAL, U.S. ARMY WEAPONS COMMAND, BECAUSE OF THE SCARCITY OF THE FUNDS.

AS REQUESTED BY YOUR LETTER DATED JUNE 30, 1967, ENCLOSED IS A COPY OF THE RELIANCE INTER-OFFICE MEMORANDUM TO THEIR NEW HAVEN OFFICE WHICH DOES STATE $1,590 AS THE LIST PRICE.