B-162615, OCT. 24, 1967

B-162615: Oct 24, 1967

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SUCH BID IS NOT THE LOW BID AND TO ALLOW CORRECTION WHEN NOTHING ON THE FACE OF THE BID INDICATED THE INTENDED BID PRICE AND WOULD RESULT IN DISPLACEMENT OF ALL OTHER BIDS WOULD BE CONTRARY TO SEC. 2-406.3 (A) (3). WHERE THERE HAVE BEEN TWO SOLICITATIONS FOR CONSTRUCTION WORK AND BIDS HAVE BEEN SUBMITTED WITHIN GOVT.'S COST ESTIMATES WITHOUT ANY QUESTION CONCERNING AMBIGUITIES BEING RAISED. FURTHER CONSIDERATION OF PROPOSAL TO READVERTISE A THIRD TIME SHOULD BE GIVEN BEFORE BIDS ARE REJECTED. SECRETARY: REFERENCE IS MADE TO A LETTER DATED OCTOBER 3. INITIALLY BIDS WERE RECEIVED FOR THE SUBJECT PROJECT AND OPENED ON APRIL 20. THEY WERE ALL REJECTED AND THE SCOPE OF THE WORK WAS SCALED DOWN TO ASSURE RECEIPT OF NEW BIDS WITHIN THE FUNDING AND PROJECT LIMITATIONS.

B-162615, OCT. 24, 1967

BIDS - MISTAKES - CORRECTION DECISION TO SECY. OF THE NAVY CONCERNING PROTEST OF SOUTHEASTERN ELECTRIC CONTRACTING CO., INC., AGAINST AWARD TO E.C. ERNEST, INC. ON BASIS OF CORRECTED BID FOR UNDERGROUND WATER, ETC., DISTRIBUTION LINES FOR NORFOLK NAVAL SHIPYARD. ALTHOUGH BIDDER WHO STATED PRICE FOR ITEM OF FILL AS $2,062,347, PER CUBIC YARD WHEN HE INTENDED TO BID $4.00 AND OTHER BID PRICES RANGED FROM $1.65 TO $7.00 HAS SUBMITTED AN ERRONEOUS BID, SUCH BID IS NOT THE LOW BID AND TO ALLOW CORRECTION WHEN NOTHING ON THE FACE OF THE BID INDICATED THE INTENDED BID PRICE AND WOULD RESULT IN DISPLACEMENT OF ALL OTHER BIDS WOULD BE CONTRARY TO SEC. 2-406.3 (A) (3), ASPR, AND COMPETITIVE BIDDING STATUTES. 37 C.G. 210. THEREFORE, COMP. GEN. DOES NOT CONCUR IN ADMINISTRATIVE RECOMMENDATION TO ALLOW CORRECTION OF THE BID. WHERE THERE HAVE BEEN TWO SOLICITATIONS FOR CONSTRUCTION WORK AND BIDS HAVE BEEN SUBMITTED WITHIN GOVT.'S COST ESTIMATES WITHOUT ANY QUESTION CONCERNING AMBIGUITIES BEING RAISED, FURTHER CONSIDERATION OF PROPOSAL TO READVERTISE A THIRD TIME SHOULD BE GIVEN BEFORE BIDS ARE REJECTED.

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER DATED OCTOBER 3, 1967, WITH ENCLOSURES, FROM THE DIRECTOR, CONTRACTS ADMINISTRATION DIVISION, NAVAL FACILITIES ENGINEERING COMMAND, CONCERNING THE PROTEST OF SOUTHEASTERN ELECTRIC CONTRACTING COMPANY, INC. (SOUTHEASTERN) AGAINST THE AWARD OF A CONTRACT TO E.C. ERNST, INCORPORATED (ERNST) UNDER SOLICITATION FOR CONTRACT NBY- 67143, CALLING FOR UNDERGROUND DISTRIBUTION LINES FOR STEAM, WATER, AND OTHER UTILITIES TO THE WATERFRONT PIERS AND DRYDOCKS AT THE NORFOLK NAVAL SHIPYARD, PORTSMOUTH, VIRGINIA.

INITIALLY BIDS WERE RECEIVED FOR THE SUBJECT PROJECT AND OPENED ON APRIL 20, 1967. HOWEVER, SINCE ALL OF THE BIDS EXCEEDED AVAILABLE FUNDS, THEY WERE ALL REJECTED AND THE SCOPE OF THE WORK WAS SCALED DOWN TO ASSURE RECEIPT OF NEW BIDS WITHIN THE FUNDING AND PROJECT LIMITATIONS. THE WORK WAS STATED AS FIVE ITEMS, THE FIRST CONSISTING OF THE COMPLETE PROJECT AND EACH SUCCESSIVE ITEM OMITTING PROGRESSIVELY GREATER PORTIONS. IN ADDITION THERE WAS A SIXTH ITEM TO CONSIST OF A UNIT PRICE PER CUBIC YARD FOR PROVIDING SELECT FILL WHERE NECESSARY. AN ESTIMATED QUANTITY OF SUCH FILL FOR EACH OF THE FIVE BASIC WORK ITEMS WAS STATED FOR BID EVALUATION. NEW BIDS ON THE REVISED BASIS WERE RECEIVED AND OPENED ON SEPTEMBER 19, 1967. OF THE SIX BIDS RECEIVED ERNST QUOTED THE LOWEST FIGURE FOR ITEMS 1, 2, 3, 4 AND 5. HOWEVER, ITS BID PRICE FOR ITEM 6, $2,062,347 PER CUBIC YARD, WAS GROSSLY DISPROPORTIONATE TO THE OTHER BIDS FOR ITEM 6, WHICH RANGED FROM $1.65 TO $7.00. IMMEDIATELY FOLLOWING THE BID OPENING ERNST SENT TWO TELEGRAMS TO NAVAL FACILITIES ENGINEERING COMMAND ADVISING THEM THAT ITS BID PRICE FOR ITEM 6 SHOULD HAVE BEEN $4.00 PER CUBIC YARD, RATHER THAN $2,062,347. PRIOR TO RECEIPT OF THE TELEGRAMS, THE PROCURING ACTIVITY BROUGHT THE APPARENT MISTAKE TO ERNST'S ATTENTION. ACCORDING TO STATEMENTS SUBMITTED BY ERNST, THE FIGURE $2,062,347, WHICH HAD BEEN THE AMOUNT OF ERNST'S BASE BID UNDER THE PRIOR SOLICITATION, HAD BEEN INADVERTENTLY PLACED UNDER ITEM 6 OF THE PRESENT SOLICITATION BY ITS REPRESENTATIVE AT THE BASE WHO HAD FILLED OUT THE ERNST BID FORM FROM TELEPHONE INFORMATION FROM ITS HOME OFFICE. SOUTHEASTERN ENTERED A PROTEST AGAINST AWARD OF THE CONTRACT TO ERNST ON SEPTEMBER 19, 1967.

IT IS ADMINISTRATIVELY RECOMMENDED THAT ERNST BE PERMITTED TO CORRECT ITS BID ITEM 6 TO $4.00 PER CUBIC YARD AND AWARD BE MADE TO ERNST, AND IN SUPPORT (OR DEFENSE) OF THAT RECOMMENDATION THE DIRECTOR STATES IN THE REFERENCED LETTER OF OCTOBER 3, 1967,"THAT IN VIEW OF THE PRICE DIFFERENCE BETWEEN THE FIRST AND SECOND LOW BIDDER ON BID ITEM NO. 3 * * * NO LOWER BIDDER WILL BE DISPLACED AS THE RESULT OF THE CORRECTION OF THE MISTAKE.'

ADDENDUM NO. 3 TO THE SPECIFICATIONS STATES, IN PERTINENT PART, THAT:

"1CX.7 BASIS OF BID FOR ITEM 6 SHALL BE UNIT PRICE PER CUBIC YARD FOR HAULING AWAY OF UNSUITABLE MATERIAL AND PROVIDING NEW SELECT FILL MATERIAL, BASED ON PROVIDING:

BID ITEM CUBIC YARDS OF SELECT FILL

1 2800

2 2600

3 2400

4 1400

5 900

"/B) AWARD, IF MADE, WILL BE MADE TO THE LOW CONFORMING BIDDER ON THE COMBINATION OF ITEMS 1 AND 6, 2 AND 6, 3 AND 6, 4 AND 6, OR 5 AND 6. SEPARATE AWARD ON ANY ITEM OR ON ANY OTHER COMBINATION OF ITEMS WILL NOT BE MADE. THE CONTRACT PRICE, FOR THE PURPOSE OF DETERMINING THE LOW CONFORMING BIDDER, WILL BE THE LUMP SUM BID UNDER ITEMS 1, 2, 3, 4 OR 5 PLUS THE UNIT PRICE BID UNDER ITEM 6 MULTIPLIED BY THE RESPECTIVE ESTIMATED QUANTITIES.'

IT IS REPORTED THAT ERNST'S LOW BID ON ITEM 3 IS WITHIN THE FUNDS AVAILABLE FOR THE PROJECT, AND THAT IF THE RECOMMENDED CORRECTION OF THAT FIRM'S ITEM 6 BID IS PERMITTED AWARD WILL BE MADE TO IT FOR ITEMS 3 AND 6; THAT OTHERWISE IT IS PROPOSED TO READVERTISE THE WORK "WITH REVISED SPECIFICATIONS TO ELIMINATE CERTAIN AMBIGUITIES.'

WHILE THERE APPEARS TO BE LITTLE, IF ANY, DOUBT THAT ERNST'S BID ON ITEM 6 IS IN ERROR, $2,062,347 IS THE FIGURE WHICH APPEARS ON THE BID FOR ITEM 6 AND IF WE ADD ITEM 6 (MULTIPLIED BY THE RESPECTIVE ESTIMATED QUANTITIES) TO THE OTHER ITEMS AS REQUIRED BY ADDENDUM NO. 3, ERNST IS NOT THE LOW BIDDER ON ANY BASIS ON WHICH AWARD CAN BE MADE. THE REQUESTED CORRECTION OF THE BID WOULD THEREFORE OBVIOUSLY RESULT IN THE DISPLACEMENT OF ALL OTHER BIDS. SINCE THERE IS NOTHING ON THE FACE OF THE BID WHICH WOULD INDICATE WHAT THE BID WOULD HAVE BEEN WERE IT NOT FOR THE MISTAKE, WE CAN FIND NO POSSIBLE GROUND FOR PERMITTING CORRECTION UNDER THE PROVISIONS OF SECTION 2-406.3 (A) (3) OF THE ARMED SERVICES PROCUREMENT REGULATION, WHICH STATES:

"/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.'

PRIOR TO THE PROMULGATION OF THAT REGULATION, IN A SIMILAR SITUATION CONSIDERED IN 37 COMP. GEN. 210, 212, WE STATED:

"HOWEVER, WE HAVE ALMOST NEVER PERMITTED A CORRECTION OF AN ERROR IN BID WHICH WOULD RESULT IN A BID NOT THE LOWEST SUBMITTED BECOMING LOWEST, AND THE ONLY RECENT CASE INVOLVING SUCH A SITUATION, B-128175, JUNE 19, 1956, WAS ONE IN WHICH NOT ONLY THE ERROR BUT THE AMOUNT OF THE INTENDED BID WAS ASCERTAINABLE ON THE FACE OF THE INVITATION AND BID, SO THAT RESORT TO THE BIDDER'S WORK PAPERS OR OTHER EXTRANEOUS EVIDENCE WAS NOT ESSENTIAL. WHERE CORRECTION IS ALLOWED IN A BID WHICH IS ON ITS FACE THE LOWEST RECEIVED, AND THE CORRECTION DOES NOT MAKE IT HIGHER THAN THE NEXT LOWEST BID, THE RIGHTS OF OTHER BIDDERS ARE NOT SUBSTANTIALLY AFFECTED; BUT IN A CASE SUCH AS HERE PRESENTED, WHERE A DOWNWARD CORRECTION WOULD RESULT IN DISPLACEMENT OF ONE OR MORE OTHER BIDDERS, WE FEEL THAT THE INTEREST OF THE GOVERNMENT IN PRESERVING AND MAINTAINING THE COMPETITIVE BIDDING SYSTEM REQUIRES THAT THE RIGHTS OF OTHER BIDDERS BE CONSIDERED AS CALLING FOR DENIAL OF THE CORRECTION, EXCEPT WHERE IT CAN BE ASCERTAINED SUBSTANTIALLY FROM THE INVITATION AND THE BID ITSELF.' SEE ALSO, TO THE SAME EFFECT, 41 COMP. GEN. 469; B-139803, JUNE 23, 1959; B-136927, AUGUST 23, 1958.

SHOULD IT BE CONSIDERED THAT THE ITEM 6 BID IS, ON ITS FACE, TOO CLEARLY ERRONEOUS TO BE GIVEN ANY EFFECT, THE RESULT WOULD BE THAT THE BID WAS NOT RESPONSIVE, AND WE HAVE HELD THAT CORRECTION OF AN ALLEGED ERROR MAY NOT BE PERMITTED TO CURE NONRESPONSIVENESS.

ACCORDINGLY, YOU ARE ADVISED THAT THIS OFFICE DOES NOT CONCUR IN THE RECOMMENDATION OF THE NAVAL FACILITIES ENGINEERING COMMAND THAT CORRECTION BE ALLOWED. THE FILE TRANSMITTED WITH THE LETTER OF OCTOBER 3, 1967, IS RETURNED.

WITH RESPECT TO THE COMMAND'S PROPOSAL TO READVERTISE THE WORK, WE HAVE NO INFORMATION AS TO THE NATURE OF THE "CERTAIN AMBIGUITIES" REFERRED TO. HOWEVER, IT APPEARS THAT A NUMBER OF BIDDERS HAVE TWICE SUBMITTED RESPONSIVE BIDS ON THE WORK WITHOUT ANY QUESTION HAVING HERETOFORE BEEN RAISED, AND THAT BIDS ARE AVAILABLE FROM OTHER BIDDERS THAN ERNST WHICH ARE WITHIN THE COST ESTIMATES OF THE OFFICER IN CHARGE OF CONSTRUCTION, AND WITHIN AVAILABLE FUNDS. THESE FACTS TEND TO CREATE DOUBT AS TO WHETHER A THIRD ROUND OF BIDDING IS JUSTIFIABLE UNDER THE PROVISIONS OF ASPR 2-404.1. WHILE THE INSTANT SUBMISSION FROM YOUR DEPARTMENT MAKES NO MENTION OF THEM, WE HAVE BEEN ADVISED BY A CONGRESSIONAL SOURCE THAT AT LEAST TWO OTHER INTERESTED PARTIES PROTESTED TO THE PROCURING AUTHORITY THE PROCEDURES PROPOSED TO BE FOLLOWED IN THIS INSTANCE, AND IT IS NOT UNREASONABLE TO ANTICIPATE THAT A SECOND REJECTION OF BIDS WOULD LEAD TO ADDITIONAL PROTESTS. IT IS THEREFORE SUGGESTED THAT FURTHER CONSIDERATION BE GIVEN THE MATTER BEFORE REJECTION OF ALL BIDS IS AUTHORIZED.